- Gold extends its rally for a fifth consecutive day on Friday, driven by heightened safe-haven demand following escalating threats from Russia.
- Potential headwinds for the precious metal include evolving US interest rate expectations and the continued strength of the US Dollar.
- From a technical perspective, XAU/USD continues its upward momentum, supported by the completion of the bullish "Three White Soldiers" Japanese candlestick pattern.
Gold (XAU/USD) extends its rally into Friday, marking five straight days of gains and a clean sweep of green daily candlesticks this week. However, the precious metal dipped below $2,700 during the US session after the US Dollar (USD) strengthened on the back of robust economic data. Despite this pullback, Gold remains supported by heightened safe-haven flows amid escalating Russia-Ukraine tensions.
The preliminary US Global Composite PMI climbed to 55.3 in November, up from 54.1 in October, driven by gains in both the Manufacturing PMI, which met expectations at 48.8, and the Services PMI, which exceeded forecasts, rising to 57.0 from 55.0.
This positive economic data, particularly in contrast to weaker European PMI figures, reinforces expectations that US interest rates will stay elevated. High interest rates increase the opportunity cost of holding non-yielding assets like Gold, putting downward pressure on the metal.
The data further bolstered the US Dollar, already underpinned by anticipation of Dollar-positive policies from the Trump administration set to take office in January 2025, and continued signs of strength in the US labor market.
Safe-Haven Flows Rise Amid Russia-UK Tensions
Gold continues to find support from safe-haven flows after Russia's Ambassador to the UK, Andrey Kelin, warned that the UK is now a legitimate target for Russian missile strikes. This escalation follows the UK’s approval for Ukraine to deploy British-made Storm Shadow missiles against Russian territory.
The conflict has intensified further after Russia used intercontinental ballistic missiles in response to Ukraine’s attacks on Russian targets in the Kursk region, employing US-made ATACMS missiles.
Technical Analysis: XAU/USD Maintains Bullish Momentum
Gold extended its climb on Friday, driven by the bullish “Three White Soldiers” Japanese candlestick pattern formed earlier this week. The uptrend is supported by the intraday crossover of the blue MACD indicator above its red signal line, though confirmation requires the crossover to persist until the daily close.
XAU/USD Daily Chart:
Gold has breached the first resistance level at $2,686 (the September 26 high) and is approaching the next target at $2,710, the November 8 swing high. A decisive break above $2,710 would signal a bullish shift in the medium-term trend, aligning all three major trends—short, medium, and long-term—for further upside.
Until Gold decisively breaks $2,710, medium-term downside risks persist. Key support levels include $2,686, with further downside to $2,650 if selling pressure intensifies.
While Gold remains on a bullish trajectory, its next moves will likely depend on geopolitical developments and US economic data, with the $2,710 resistance level acting as a critical test for the metal’s medium-term outlook.
