Gold Extends its Gain as Geopolitical Tension Heighten

• Russia-Ukraine tension deteriorated and pushed gold higher in the last session.
• The U.S. dollar regains strength ahead of the Initial Jobless Claims due today.
• BTC continues to break record highs and is not far from the $100,000 mark. 

Market Summary

The financial market's focus remains locked on escalating tensions in Eastern Europe after Ukraine launched long-range British missiles into Russian territory, significantly heightening geopolitical risks. This development has intensified demand for safe-haven assets, with gold rallying over 3% since the start of the week. Analysts expect the bullish momentum in gold prices to persist as relations between the two nations further deteriorate.

Meanwhile, in the U.S. stock market, sentiment soured following Nvidia's disappointing earnings report, which fell below market expectations. The news dragged down the tech-heavy Nasdaq index, exacerbated by the broader geopolitical uncertainty.

In the forex market, the U.S. dollar regained strength after a temporary pullback driven by profit-taking. Renewed optimism stems from expectations of a more measured pace of Federal Reserve rate cuts. Markets are now eyeing the U.S. job data due today, which could offer key insights into the Fed’s December interest rate decision.

In the crypto market, Bitcoin (BTC) continues its meteoric rise, breaking all-time highs and nearing the $95,000 mark. Optimism surged following reports that Trump’s social media company plans to acquire a crypto trading firm, signalling potential mainstream adoption and further growth in the digital asset space.

Current rate hike bets on 18th December Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (32.2%) VS -25 bps (67.8%) 

Market Movements

DOLLAR_INDX, H4

The Dollar Index edged higher, supported by rebounding U.S. Treasury yields. Market participants are reassessing expectations for rate cuts, with the probability of a 25 basis point cut in December dropping to 52% from 82.5% a week ago, according to the CME FedWatch Tool. Divergent views from Federal Reserve officials Michelle Bowman and Lisa Cook reflect ongoing uncertainty over inflation trends. Investors remain focused on upcoming Fed statements, Trump administration policies, and key U.S. economic data to determine the dollar's direction.

The Dollar Index is trading higher while currently near the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 55, suggesting the index might experience technical correction since the RSI retreated sharply from overbought territory. 

Resistance level: 107.00, 107.80

Support level: 106.05, 105.15

XAU/USD, H4

Gold prices climbed, testing key resistance levels as safe-haven demand surged. While expectations for fewer Fed rate cuts and rebounding Treasury yields might limit gains, geopolitical concerns surrounding the Russia-Ukraine conflict have kept gold appealing. Biden's recent decision to allow Ukraine to use long-range ATACMS missiles and Russia's relaxed nuclear weapon conditions have amplified uncertainty. With Trump preparing to re-enter office and pledging to end the war swiftly, investors remain cautious about the geopolitical landscape's impact on gold.

Gold prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 67, suggesting the commodity might extend its gains after breakout since the RSI stays above the midline. 

Resistance level: 2660.00, 2710.00

Support level: 2605.00, 2555.00

GBP/USD，H4

The Pound Sterling rebounded, driven by better-than-expected UK inflation data, which rose above the Bank of England's (BoE) 2% target. The unexpected inflation increase bolstered market expectations for the BoE to maintain higher interest rates. Over 80% of market participants now anticipate the central bank will keep rates steady at its next meeting, underscoring the resilience of the pound.

GBP/USD is trading flat whole currently near the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 46, suggesting the pair might extend its gains since the RSI rebounded sharply from oversold territory. 

Resistance level: 1.2700, 1.2805

Support level: 1.2620, 1.2500

EUR/USD，H4

The EUR/USD pair has formed a double-top price pattern, hovering around its recent low of 1.0520. A decisive break below this level could trigger a bearish signal, indicating further downside potential for the pair. The euro remains under pressure as the ECB maintains its dovish stance, which dampens the appeal of the common currency. In contrast, the U.S. dollar is strengthening amid market anticipation for clarity on President-elect Donald Trump’s proposed policies, including fiscal stimulus and trade reforms, which could further bolster the greenback.

EUR/USD was hammered to its recent low level near the 1.0520 mark; a break below the level may be a bearish signal for the pair. The RSI has been kept below the 50 level while the MACD failed to break above the zero line, suggesting that the bearish momentum is forming. 

Resistance level: 1.0607, 1.0680

Support level: 1.0520, 1.0440

GBP/JPY, H4

The GBP/JPY pair continues to trade within its established downtrend channel, reflecting a bearish outlook for the currency pair. The Japanese Yen remains under pressure due to uncertainty surrounding the Bank of Japan's (BoJ) monetary policy stance. Meanwhile, the British Pound faces additional headwinds after the Bank of England (BoE) slashed interest rates last month, signaling an end to its monetary tightening cycle. These factors have collectively weighed on the pair's performance, maintaining its bearish trajectory.

The pair has formed a lower-high price pattern and is suggesting a bearish bias for the pair. The RSI is hovering near the 50 level while the MACD is on the brink of breaking above the zero line, suggesting the bearish momentum is minimal. 

Resistance level: 197.60,  199.00

Support level:  194.05, 191.90

NASDAQ, H4:The Nasdaq's performance was weighed down by Nvidia's earnings report, which fell short of expectations, leading the tech-heavy index to close slightly lower in the last session. Equity markets are facing additional pressure from escalating geopolitical tensions in Eastern Europe, which have dampened risk-on sentiment. Meanwhile, the VIX index, a key measure of market volatility and investor sentiment, surged to its highest level since the U.S. election period, signalling a further decline in risk appetite across the market.

Nasdaq is yet to fill the gap incurred from its recent plummet, suggesting a bearish bias for the index. The RSI is flowing near the 50 level while the MACD is edging lower, suggesting a bullish momentum decline. 

Resistance level:  21105.00, 21955.00

Support level:  20395.00, 19860.00

CL OIL, H4Crude oil prices slipped after the U.S. Energy Information Administration (EIA) reported a higher-than-expected increase in crude inventories (+0.545M vs. +0.400M expected). A subdued demand outlook, including the growing adoption of electric vehicles and concerns over global economic conditions, added downward pressure. However, escalating Russia-Ukraine tensions continue to cap losses, with investors closely monitoring geopolitical developments for potential supply disruptions

Oil prices are trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 53, suggesting the commodity might extend its losses since the RSI retreated sharply from overbought territory. 

Resistance level: 69.90, 72.60

Support level: 66.90, 65.60