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Here is the XAUUSD news update for today, December 5, 2023. The price of gold (XAU/USD) experienced a dramatic change on Monday, dropping nearly $125 after reaching an all-time high of around $2,144-2,145. Subsequently, prices stabilized around $2,020 as the market responded to the peak of U.S. interest rates, with the Federal Reserve (Fed) likely to remain dovish until March 2024.
The dovish expectations for the Fed have lowered U.S. Treasury yields, but the U.S. dollar did not strengthen after its previous rally. Geopolitical tensions in the Middle East and issues in China drove gold prices, as a safe-haven asset, back up to $2,035 during the Asian session on Tuesday.
However, it remains unclear whether gold prices will continue to rise, as traders may be waiting for the release of U.S. economic data, such as the ISM Services PMI and JOLTS Job Openings on Tuesday, along with the ADP employment report ahead of Friday's Nonfarm Payroll (NFP).
Daily Market Movement Summary: Gold prices remain supported by the Fed's dovish stance and more moderate risk sentiment.
On Tuesday, gold prices recovered from a sharp decline around $2,144-2,145, which marked the previous record high, thanks to a combination of supporting factors. Geopolitical risks and tensions related to a new outbreak in China overshadowed optimism from business surveys, such as China's Caixin Services PMI exceeding market expectations.
Despite Fed Chair Jerome Powell's hawkish stance, the market believes that the U.S. central bank has completed its rate hikes, possibly shifting to easing in the first half of next year. The FedWatch tool indicates a nearly 60% chance of a rate cut by the Fed in March 2024, putting pressure on U.S. Treasury yields and weakening the U.S. dollar.
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