On Friday (November 29), in the Asian market, spot gold experienced a volatile upward trend, with gold prices briefly breaking the $2660 mark, reaching as high as $2662.67 per ounce, marking a new high in nearly two trading days, with an increase of about 0.95%. The main reason for the increase in gold prices is the heightened market concerns over geopolitical tensions, leading to a resurgence of safe-haven buying, thus pushing gold prices higher. Additionally, after the dollar index's rebound was hindered on Thursday, it continued its downward trend on Friday, further providing upward momentum for gold.
On the geopolitical front, the Israeli military stated on Thursday that it had airstruck Hezbollah's facilities storing medium-range rockets in southern Lebanon, with both sides accusing each other of violating the ceasefire agreement. Israel also claimed to have fired at vehicles of "suspicious elements" in multiple locations in southern Lebanon. The Lebanese military accused Israel of violating the ceasefire agreement, highlighting the fragility of the truce and further escalating market unease, driving safe-haven flows into the gold market.
Meanwhile, Russia launched its second large-scale attack this month on Ukraine's energy infrastructure, causing widespread power outages across Ukraine. Russian President Putin stated that Russia might use new hypersonic missiles to strike Kyiv's "decision-making center" in response to Ukraine's firing of Western missiles at Russian territory. Putin also warned that if Kyiv acquires nuclear weapons, Russia will take all measures against Ukraine. The escalation of the Russia-Ukraine war undoubtedly heightened global investors' risk aversion, further boosting gold prices.
In addition to geopolitical tensions, the decline in the dollar index also supported gold. After Thursday's rebound was hindered, the dollar index continued to fall on Friday in the Asian market, decreasing by about 0.3% to 105.84, the lowest level since November 13. A weaker dollar makes dollar-denominated gold relatively cheaper, attracting more investors to buy gold as a safe-haven asset.
Furthermore, Thursday was the US Thanksgiving holiday, and Friday is "Black Friday." Investors will also focus on US consumer spending data. Next week, the US will release key economic data, including job vacancies, the ADP employment report, and the non-farm payrolls report, which could influence the Federal Reserve's monetary policy direction. Currently, the market expects a 62.8% probability of the Federal Reserve cutting rates by 25 basis points in December.
Technically speaking, gold prices have been in a rebound adjustment phase after a sharp drop on Monday. The MACD indicator shows an initial bullish signal, and in the short term, gold prices may face resistance near the 55-day moving average of $2661.44. If prices can steadily stand above this level, it may provide support for further bullish signals, with further resistance at $2680. Conversely, if prices fail to break through this resistance, there is a need to be cautious of a price decline, re-entering a downward trend.
Overall, geopolitical uncertainties and a weak dollar provide strong support for gold prices. With rising risk aversion, gold is likely to continue its strong trend.
