Gold gains as an overall weaker dollar & lower U.S. Treasury yields buoyed demand

Gold rose by 0.08%, closing at 61072, driven by a weakened dollar and lower U.S. Treasury yields, enhancing demand for the precious metal. The U.S. economic landscape played a pivotal role, with a larger-than-expected 5.4% decline in October’s durable goods orders, indicating a substantial economic cooldown post robust third-quarter growth. 

Concurrently, a higher-than-anticipated drop in new unemployment benefit claims pointed towards a labour market slowdown amidst increasing interest rates. Minutes from the recent U.S. Federal Reserve meeting revealed a cautious approach, agreeing to proceed “carefully” with interest rate hikes contingent on inflation control. While a rate freeze is expected in December, there is a scaling back of rate cut expectations in 2024, per CME’s FedWatch Tool. India’s October imports surged by 60%, reaching a 31-month high, driven by lower prices ahead of a significant festival, prompting heightened jewellery purchases. While this may boost benchmark gold prices, concerns loom over a potential widening of India’s trade deficit and resultant pressure on the rupee. Chinese jewellery companies reported a substantial 12.2% YoY increase in retail sales of gold, silver, and other jewellery, totalling $34.4 billion between January and September, highlighting robust consumer demand in China. 

Technically, the gold market experiences short-covering, evidenced by a significant 10.13% drop in open interest, settling at 5049. Support lies at 60995, with a potential test at 60915, while resistance is anticipated at 61170, with a breakthrough targeting 61265.