After rising for five consecutive days, spot gold prices hit a nearly two-week high during the European session on Friday (November 22), trading at $2697.33 per ounce, with a 1.04% intraday increase. Despite the strength of the US dollar and the high yield of US treasury bond bonds, the gold price remained firm, showing a strong demand for safe haven.

The recent escalation of the Russia Ukraine situation has once again triggered market risk aversion, driving funds into the traditional safe haven asset of gold. At the same time, US economic data and statements from Federal Reserve officials have provided new clues to the market.

Current market background

In the context of the further intensification of the Russia-Ukraine conflict, market sentiment tends to be cautious. The escalation of the situation has intensified geopolitical tensions, providing strong support for the price of gold. In addition, the performance of the US economic data is complex, with initial jobless claims falling to a seven month low and the Philadelphia Fed's manufacturing index unexpectedly declining, indicating an unbalanced economic recovery.

The US dollar index hit a new high since October 2023, mainly driven by expectations of Federal Reserve policy. The market currently expects a 55% chance of the Federal Reserve cutting interest rates in December, while key officials tend to be cautious in their statements. Federal Reserve Chairman Powell warns of potential inflationary shocks, while New York Fed Chairman Williams points out that the labor market is currently in a balanced state and has not exerted upward pressure on inflation.

Market Fundamental Analysis

The rise in gold prices is mainly due to the following aspects:

1. Driven by the demand for hedging

The escalation of the Russia Ukraine situation continues to drive safe haven funds into the gold market. Geopolitical tensions not only boost market risk sentiment, but also decrease investors' confidence in other asset classes, thereby increasing the attractiveness of gold.

2. Expectations for Federal Reserve Policy

Despite divergent expectations in the market for further interest rate cuts by the Federal Reserve, inflation remains a focal point. Some analyses suggest that if US inflation cannot quickly fall to the target level, the Federal Reserve may have to slow down the pace of monetary easing, which could provide long-term support for gold prices.

3. Economic data is mixed

The decline in the number of initial jobless claims indicates that the job market remains resilient, while the rebound in housing sales data reflects a rebound in consumer confidence. However, the contraction of manufacturing activity has added uncertainty to the economic outlook, further driving risk aversion.

Technical observation

Technically speaking, gold has risen further after breaking through the key resistance of $2665, approaching the psychological threshold of $2700. The $2665 line was once the resonance point of the 50% Fibonacci retracement level and the 100 cycle simple moving average of the correction market, and its effective breakthrough significantly enhanced the market's bullish confidence. Technical indicators show that the daily momentum is gradually increasing, indicating that there is still further upward potential for the future trend. If the gold price can effectively break through $2700, it may test the supply range of $2710-2711 and even challenge the next key resistance level of $2736.

On the other hand, in terms of support below, $2665 has become the main short-term support level. If it falls below this level, the gold price may backtrack to the 38.2% Fibonacci retracement level of $2635, and even further explore the integer level of $2600. The key technical support is around $2560 and $2537, and if these positions are lost, the market may turn bearish again.

Future Trends and Prospects

Overall, the price of gold has been supported by both safe haven sentiment and macroeconomic factors recently, with bullish momentum dominating. With the further development of the Russia Ukraine situation and the market's further digestion of the Federal Reserve's policy path, gold may maintain a strong and volatile pattern in the short term. Market participants need to pay attention to the global PMI data released tonight, which will provide new guidance for the gold trend. In addition, investors should closely monitor geopolitical developments and further statements from Federal Reserve officials to assess the long-term trend of gold prices.