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 Feds 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 Trumps social media company plans to acquirea 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

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