Forex News
- Gold holds on to Wednesday’s sharp gains, but a recovering US Dollar limits further upside.
- Hawkish Fed expectations remain a key headwind for the non-yielding metal.
- XAU/USD shows improving bullish momentum, with the 21-day SMA offering immediate support.
Gold (XAU/USD) stalls its rebound on Thursday as the US Dollar and Treasury yields regain ground following the previous day’s rout, triggered by US midterm election results that fuelled volatility across financial markets. At the time of writing, XAU/USD trades around $4,121, after reaching an intraday high of $4,146, its highest level in two weeks.
The precious metal surged 3.64% on Wednesday, while West Texas Intermediate (WTI) tumbled 8% as traders speculated that a Democratic sweep of Congress could restrict funding for Trump’s military campaign against Iran and increase pressure to end the war, now in its ninth month.
Moreover, the prospect of divided government eases concerns about the fiscal outlook, as passing new tax cuts or spending packages could become more difficult. This supports Treasury buying and pushes yields lower, weighing on the US Dollar (USD). The slide in Oil prices also offers some relief from inflation concerns, and together these developments drive renewed demand for Gold.
On Thursday, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.60, recovering from an intraday low of 101.20. The US 10-year Treasury yield rises to 4.89% from an earlier low of 4.83%.
Meanwhile, a hawkish Federal Reserve (Fed) outlook remains a key hurdle for bullion. Oil prices are still well above pre-war levels, keeping inflation risks alive.
With the Fed committed to bringing inflation back to its 2% target, traders expect interest rates to remain elevated for longer and anticipate a December rate hike, with the CME FedWatch Tool putting the odds at around 79%. Higher borrowing costs weigh on the non-yielding metal by increasing the opportunity cost of holding it.
Cleveland Fed President Beth Hammack reinforced the hawkish outlook on Thursday, saying “monetary policy needs to move to restrictive stance” as inflation has been “too high, moving in wrong direction.” She added that “gradual rate hikes are the best way to make sure the US Central Bank gets inflation back to 2%” and are less disruptive to the economy and financial system.
On the data front, US Initial Jobless Claims fell to 189K from 194K, below expectations of 196K, while the four-week moving average declined to 194.75K from 196.75K. Attention now turns to Friday’s Nonfarm Payrolls (NFP) report for fresh clues on the Fed’s policy path.
Technical analysis: Bulls eye 50-day and 100-day SMAs near $4,200
On the daily chart, XAU/USD maintains a capped bias as spot holds below the medium- and long-term moving averages. The 21-day simple moving average (SMA) at $4,077 now underpins the recovery as immediate support, but price remains below the 50-day, 100-day and 200-day SMAs.
Momentum has improved, with the Relative Strength Index near 51 and the Moving Average Convergence Divergence (MACD) turning positive, which hints at rebuilding bullish pressure but does not yet overturn the structurally bearish setup.
On the downside, initial support is seen at the 21-day SMA around $4,077, followed by the psychological $4,000 level and the year-to-date low of $3,870.
On the upside, immediate resistance is seen at the closely aligned 100-day and 50-day SMAs at $4,203 and $4,205, respectively. A more substantial barrier emerges at the 200-day SMA near $4,468. Only a clear daily close above these clustered moving averages would start to ease the prevailing bearish bias.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Swiss National Bank (SNB) Chairman Martin Schlegel said the policy rate remains the central bank’s main tool during a speech titled “Transmission and conduct of monetary policy in Switzerland” at a conference in Zurich on Thursday.
Key takeaways
SNB’s main tool is the policy rate; if necessary, it also uses other measures like forex interventions.
SNB has met the price stability goal so far this century.
Our monetary policy strategy works across a broad range of circumstances.
The Swiss Franc has relatively strong safe-haven properties compared to other currencies.
Switzerland is highly exposed to external economic shocks.
SNB doesn’t believe in using forward guidance.
We have the right tools to fight inflation in the future.
At present, we don’t see a broadening of price pressures in Switzerland.
Swiss inflation at the moment is mainly limited to fuel and energy.
Swiss Franc Price Today
The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies today. Swiss Franc was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.10% | 0.04% | 0.00% | 0.13% | 0.06% | -0.03% | 0.14% | |
| EUR | -0.10% | -0.05% | -0.12% | 0.03% | -0.04% | -0.14% | 0.03% | |
| GBP | -0.04% | 0.05% | -0.06% | 0.08% | 0.00% | -0.08% | 0.08% | |
| JPY | 0.00% | 0.12% | 0.06% | 0.14% | 0.07% | -0.04% | 0.14% | |
| CAD | -0.13% | -0.03% | -0.08% | -0.14% | -0.07% | -0.17% | 0.00% | |
| AUD | -0.06% | 0.04% | -0.01% | -0.07% | 0.07% | -0.08% | 0.07% | |
| NZD | 0.03% | 0.14% | 0.08% | 0.04% | 0.17% | 0.08% | 0.19% | |
| CHF | -0.14% | -0.03% | -0.08% | -0.14% | -0.00% | -0.07% | -0.19% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).
Commerzbank’s Antje Praefcke notes that EUR/USD has been firm as the Dollar suffers from political fallout in the US and Euro area inflation hits 4%. With core inflation at 2.5% and the ECB deposit rate at 2.50%, markets now price in two further ECB hikes by mid‑2027, which currently underpin the Euro despite medium‑term growth concerns.
Euro benefits from ECB expectations
"EUR/USD steadily gained ground over the course of yesterday’s trading session. Initially, the dollar suffered from the after-effects of the Democrats’ landslide victory. The fact that Trump’s policies were punished so decisively came as something of a surprise."
"At the same time, euro area inflation rose to 4% year-on-year in October, while the core rate remained unchanged at 2.5%. Although these figures were in line with analysts’ expectations, with an inflation target of 2% and a deposit rate of 2.50%, they clearly make the case for further ECB rate hikes. After all, as a consequence of persistently high energy prices, an increasing number of companies is likely to pass on higher costs over time."
"As a result, core inflation is likely to rise in the coming months, even if headline inflation may already start to decline again due to base effects. The market therefore sees a good chance of two further ECB rate hikes by the middle of next year. For the time being at least, these expectations are providing support to the euro - although, of course, higher interest rates will weigh on the growth outlook over the medium term."
"The US labour market report is still due tomorrow. However, the Fed’s current focus is on inflation rather than employment. Moreover, the report is likely to be solid but unspectacular, meaning that it is unlikely to provide much tailwind for the dollar, especially since a Fed rate hike in December is already largely priced in. It is therefore possible that this week will ultimately belong to the euro, allowing it to head into the weekend somewhat stronger against the dollar."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Cleveland Federal Reserve President Beth Hammack argued on Thursday that gradual rate hikes are less disruptive to the economy and the financial system, per Reuters.
Key takeaways
"Monetary policy needs to move to a restrictive stance."
"Gradual rate-hike path is the best way forward for monetary policy."
"US central bank's independence is critical to get inflation to 2%."
"Gradual rate hikes best way to make sure us central bank gets inflation back to 2%."
"Inflation has been too high, moving in wrong direction."
"Dollar remains word’s top reserve currency."
Hammack backs gradual hikes and restrictive stance, keeping Fed tone firmly hawkish
Fed’s Hammack delivered a distinctly hawkish message, with an FXS Speechtracker score of 8.1/10, above the established baseline of 7.6/10, underscoring a stronger-than-usual tightening bias. The emphasis that “gradual rate hikes” are “less disruptive” yet still necessary to move policy into a “restrictive stance,” alongside the warning that inflation is “too high” and “moving in the wrong direction,” signals a clear preference for continued tightening rather than a pause.
The FXS Fed Sentiment Index rose by 1.05 points to 145.23, reinforcing that Hammack’s remarks push the overall Fed tone deeper into hawkish territory. With the index well above the neutral 100 mark, the speech aligns with a policy path biased toward additional rate hikes and sustained restrictive settings, consistent with the elevated FXS Speechtracker reading.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- Silver loses momentum following Wednesday's sharp rally as the US Dollar and Treasury yields recover.
- XAG/USD remains below the Bollinger midline near $55, keeping the broader bearish bias intact.
- RSI recovers from oversold territory, but negative MACD and elevated ADX signal persistent selling pressure.
Silver (XAG/USD) struggles to extend gains on Thursday after surging 5.18% the previous day, as a rebound in the US Dollar (USD) and Treasury yields takes some momentum out of the rally. The white metal climbed to $53.48 earlier on Thursday, its highest level since October 29, before easing to around $52.79 at the time of writing.
Wednesday’s rally followed the Democratic sweep of Congress, with traders betting that a divided government could curb fiscal expansion and put pressure on President Donald Trump to end the war with Iran. The outcome triggered broad-based US Dollar weakness, while tumbling Oil prices eased inflation concerns and helped push Treasury yields lower, lifting demand for precious metals.
However, expectations of another interest rate hike by the Federal Reserve (Fed) in December provide support for the Greenback and remain a headwind for non-yielding assets such as Silver.
Data released on Thursday showed US Initial Jobless Claims fell to 189K from 194K, below expectations of 196K. The four-week moving average declined to 194.75K from 196.75K. Attention now shifts to Friday’s US Nonfarm Payrolls (NFP) report for fresh clues on the Fed’s policy path.
Technical Analysis
On the daily chart, XAG/USD continues to form lower highs after briefly peaking near $70 in late August, signalling that sellers retain control. The metal holds below the Bollinger Bands’ 20-period Simple Moving Average (SMA) at roughly $55 and well under the upper band resistance near $61.67. Price is sliding within the lower half of the volatility envelope.
The Relative Strength Index (RSI) (14) has recovered from oversold territory to around 40 but remains below the midline and Moving Average Convergence Divergence (MACD) remains slightly negative, hinting that downside momentum persists despite a modest loss of selling pressure, with a strong Average Directional Index (ADX) above 40 underscoring a still-solid prevailing trend.
On the downside, immediate support is seen at the horizontal floor around $50.00, ahead of the lower Bollinger Band near $48.40, where volatility support could emerge if the selloff extends. On the topside, initial resistance comes at the Bollinger mid-line at about $55.04, and only a sustained recovery above that barrier would open the way toward the upper band resistance around $61.67, where sellers are likely to reassert control.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Nomura strategists highlight a downside surprise in Sweden’s October CPIF and CPIF ex-energy inflation. They note that recent Riksbank rate hikes may now be questioned, although strong GDP growth and earlier high energy prices keep upside inflation risks alive ahead of key data before the February policy meeting.
Soft CPIF data versus hawkish guidance
"Flash CPIF inflation surprised, decreasing 0.4pp to 1.1% y-o-y in October (Nomura: 1.5%, Riksbank: 1.7%, consensus: 1.4%). CPIF ex-energy inflation also surprised to the downside and fell 0.4pp to 0.1% y-o-y, lower than our below-consensus forecast (Nomura: 0.4%, Riksbank: 0.6%, consensus: 0.5%)."
"Headline y-o-y inflation is low, largely due to recent tax and fiscal policy changes, including the temporary halving of food VAT in April. However, Sweden reversed part of its temporary fuel tax cuts on 1 October, leading to an automatic rise in petrol and diesel pump prices. Despite that, energy prices exerted less upward pressure than we expected, rising 2.3% m-o-m."
"The Riksbank raised its policy rate for the first time since 2023 yesterday. We expect two more policy rate increases – in February and May 2027. The fall in energy prices over the past day and downside surprise to inflation this morning will likely cast doubts over how many hikes will be needed, or at least their timing."
"However, upside risks to inflation remain, including from the strong economy (with robust GDP increases in Q2 and Q3) and the prolonged period of high energy prices. There are two more inflation prints before the February decision, which will be important for determining whether the Riksbank will hike at that point."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Initial Jobless Claims went down to 189K vs. the previous week.
- Continuing Jobless Claims rose to 1.718M.
According to a report from the US Department of Labour (DOL) released on Thursday, the number of US citizens submitting new applications for unemployment insurance decreased to 189K for the week ending October 31. The latest print came in below initial estimates (196K) and was lower than the previous week’s 195K (revised from 194K).
Additionally, the 4-week moving average went down by 2.25K to 194.75K vs. the previous week’s revised prints (197K).
The report also indicated that Continuing Jobless Claims increased by 23K to 1.718M for the week ending October 24.
Market reaction
The Greenback regains fresh upside traction, reversing part of the previous day’s decline and trading with humble gains around 101.60 when tracked by the US Dollar Index (DXY) on Thursday.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
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