At the beginning of the Asian market on Thursday (November 21), spot gold fluctuated narrowly and is currently trading around $2649.57 per ounce. Gold prices rose for the third consecutive trading day on Wednesday, reaching a new high of over a week at $2655.27 per ounce and closing at $2650.07 per ounce. The escalating tensions between Russia and Ukraine have intensified geopolitical concerns, prompting investors to seek safe haven.

Earlier on Wednesday, gold prices were suppressed by the 55 day moving average, and market expectations for the Federal Reserve's December interest rate cut cooled. The US dollar index rebounded, causing gold prices to fall back to $2618.78 per ounce at one point, as investors hoped to further understand the Fed's interest rate plan and the policies proposed by US President elect Trump.

Even though the recent uptrend has paused, the US dollar index has surged by about 3% since the US election, as people increasingly expect the Federal Reserve to slow down its interest rate cut path due to concerns that Trump's policies may reignite inflation.

Many people hold a pessimistic attitude towards the Fed's interest rate cuts, which we believe is wrong, "said Jay Hatfield, CEO of Infrastructure Capital Advisors in New York. Except for Japan, other countries in the world must cut interest rates because they are basically zero growth, and without the United States, they would fall into recession. Therefore, the biggest variable is the United States. Everyone is extremely pessimistic about the Fed's interest rate cuts, and in our opinion, it is even too pessimistic

In recent weeks, the market's expectations for the path of interest rate cuts have converged, but there are still fluctuations. According to CME's FedWatch Tool, the market believes that the probability of the Federal Reserve cutting interest rates by 25 basis points at its December meeting is 52%, lower than 82.5% a week ago.

A Reuters survey shows that most economists expect the Federal Reserve to cut interest rates at its December meeting, and the rate of cuts in 2025 will be smaller than expected a month ago, as Trump's policies may lead to rising inflation. Recent statements from Federal Reserve officials, including Chairman Powell, indicate that the Fed will maintain a slow and cautious path towards rate cuts

On Wednesday, Michelle Bowman and Lisa Cook of the Federal Reserve expressed conflicting views on the direction of US monetary policy, with one citing ongoing concerns about inflation and the other expressing confidence that price pressures will continue to ease.

The US dollar rose 0.44% on Wednesday, closing at 106.64, regaining its post election gains after three consecutive trading days of decline. However, part of the reason for the rise of the US dollar on Wednesday was the increasing market concern over the geopolitical situation between Russia and Ukraine, which also provided safe haven buying demand for gold prices, helping them turn a downward trend into an upward trend during Wednesday's New York session.

Geopolitical tensions have intensified, partly due to Russian President Putin lowering the threshold for using nuclear strikes to respond to broader conventional attacks.

In addition, Ukraine launched 12 British "Storm Shadow" cruise missiles at Russia on Wednesday, which is the latest Western weapon that Ukraine has been allowed to use against Russian targets after using American ATACMS missiles to attack Russia on Tuesday.

Russian war correspondents extensively reported on the attack on Telegram, and an official who declined to be named also confirmed the news. The spokesperson of the Ukrainian General Staff stated that there is currently no information in this regard.

Moscow stated that using Western weapons to strike deep into Russian territory would be a significant escalation of the conflict. Kiev stated that it needs to have the capability to defend itself by striking Russian rear support bases.

Russian war correspondents posted footage on Telegram, including the sound of missiles hitting the Kursk region. At least 14 loud explosions can be heard, most of which were preceded by the sharp whistling of missiles.

The pro Russian Two Majors Telegram channel reported that Ukraine has launched up to 12 "Storm Shadow" missiles into the Kursk region and provided pictures of missile fragments with the words "Storm Shadow" clearly visible.

A spokesperson for UK Prime Minister Keir Starmer stated that the Prime Minister's Office will not comment on any reports or actions related to the matter.

The UK previously allowed Ukraine to use 'Storm Shadow' within its borders. The Kiev government has been pressuring Western partners to allow them to use this weapon to strike deep targets in Russia, and this week, two months before Biden stepped down, obtained permission from the United States to use ATACMS missiles against deep targets in Russia.

The range of 'Storm Shadow' exceeds 250 kilometers, enabling Ukraine to strike targets deeper within Russian territory than before.

On Tuesday, Ukraine launched the US ATACMS missile for the first time at a military arsenal in the Bryansk region of Russia, triggering a strong reaction from Moscow, which announced a revision of its basic nuclear deterrence policy to lower the threshold for the use of nuclear weapons. Washington has stated that it believes there is no need to adjust its nuclear posture and has accused Moscow of resorting to irresponsible rhetoric.

Military analysts say that missiles with longer ranges are unlikely to give Ukraine a decisive advantage in the war, but may help strengthen its position, especially in the battle for a small piece of land in the Kursk region of Russia that it occupied in August last year.

Due to the use of US British missiles by Ukraine, the situation has become even more tense. The United States closed its embassy in Kiev on Wednesday morning out of extreme caution, as the embassy faced a significant threat of airstrikes.

An air raid warning in the early afternoon made the people of Kiev anxious. But Ukrainian military intelligence agencies claim that the widely reported threat of large-scale drone and missile attacks across Ukraine is false, and accuse Russia of trying to create panic by spreading relevant information online.

The Italian and Greek embassies have also stated that they have been closed. The French embassy remains open, but urges its citizens to remain vigilant. The Kremlin has stated that it will not comment.

Russian Foreign Intelligence Agency Director Sergei Naryshkin said in an interview on Wednesday that Moscow will retaliate against NATO countries that assisted Ukraine in launching long-range missile attacks on Russian territory.

Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, said, "Obviously, this has driven safe haven interest. I have indeed seen the re emergence of inverse correlation in recent weeks and believe that the strengthening of the US dollar is a negative factor for the future of gold

The Bank of England may need to accelerate the pace of interest rate cuts, which also provides support for gold prices.

Bank of England Deputy Governor Dave Ramsden stated on Wednesday that the likelihood of UK inflation falling below the bank's latest forecast is at least as high as the likelihood of meeting the forecast, and therefore may need to accelerate the pace of interest rate cuts.

Ramsden supported the Bank of England to start cutting interest rates as early as May. Three months later, the majority of members of the Monetary Policy Committee supported policy easing. Earlier this month, the majority of committee members, including him, supported a second 25 basis point rate cut, with the current UK interest rate at 4.75%.

After the latest interest rate cut, the Bank of England stated that the pace of policy easing in the future will be gradual and predicted that inflation will remain above its target of 2% until early 2027, partly due to the stimulus measures and minimum wage increase in the first budget of the new Labour government.

Ramsden said that this result is "reasonable," but he believes that there is at least the same possibility of a faster decline in inflation, "which is in line with a more symmetrical wage and price setting and less domestic inflationary pressure.

Investors' attention is still focused on several Federal Reserve officials who will give speeches this week. In addition, changes in the number of initial jobless claims in the United States will be announced on this trading day, and investors need to pay close attention.

In addition, investors are still waiting for Trump to appoint the Secretary of the Treasury, which is one of the highest level cabinet positions overseeing the country's financial and economic policies. Some of Trump's other candidates have raised questions about their qualifications and experience. Market participants are currently waiting for the clarification of Trump's policies, as well as the next round of employment and inflation data that may affect the Federal Reserve's policies.

Michael Lorizio, head of US interest rate trading at Manulife Investment Management, said, "We seem to have to wait until the next non farm payroll and CPI data release before we can truly see the impact of these data on the Federal Reserve

From a technical perspective, at the daily level, the gold price has broken through the resistance of the short-term downward trend line, and the short-term bullish signal has been strengthened, which is expected to further test the resistance near the Bollinger Bands' mid track 2686.63.

Daily chart of spot gold