Gold risen to a near three week high amid expectations that the Federal Reserve would decrease interest rates soon.
The gold price (XAUUSD) is struggling to capitalize on its intraday surge to a near three-week high and is trading just around $2,050 as the European session begins on Friday. The US Dollar (USD) recovers some of the previous day’s loss to a near five-month low, which is interpreted as a bullish sign. The commodity is benefiting from a factor that is acting as a tailwind. Meanwhile, the USD’s rise could be ascribed purely to some repositioning trading ahead of critical US inflation statistics, and it is expected to remain contained on the back of anticipation that the Federal Reserve (Fed) will abandon its hawkish attitude.
Traders are now looking to the US PCE Price Index for new clues about the Federal Reserve’s interest rate stance.
Investors, on the other hand, are unsure when the US Federal Reserve would begin decreasing interest rates in 2024. As a result, all eyes will be on the release of the US Core Personal Consumption Expenditure (PCE) Price Index, which will affect the Fed’s future policy decisions and provide a new directional push to the non-yielding Gold price. Meanwhile, the fundamental backdrop appears to be biased in favor of bulls, implying that the path of least resistance is bullish. The precious metal is facing upward resistance. Nonetheless, the XAUUSD appears set to rise for the second week in a row.
Daily Market Movers : The gold price takes a temporary halt ahead of the US PCE Price Index.
On the last day of the week, gold reached its highest level since December 4 due to expectations of a change in the Federal Reserve’s monetary stance.
A series of Fed officials recently attempted to counter the concept of quick interest rate decreases next year. But failed to sway investor sentiment.
The CME Group’s FedWatch Tool predicts a higher probability of a Fed rate cut action by March 2024. And 150 basis points of cumulative cuts by the end of the year.
The wagers were confirmed by The US economy grew at a 4.9% annualized rate in the third quarter. Compared to the 5.2% increase previously reported.
According to the Labor Department, initial jobless claims increased to 205,000 during the week ending December 16 and stayed at historically low levels.
The benchmark 10-year US Treasury bond yield has been hovering near its lowest level since July. While the US Dollar has recovered a bid from a five-month low.
This, combined with the potential of a worldwide rate-cutting cycle. Might benefit the non-yielding yellow metal and favor optimistic traders.
Inflation in the United Kingdom fell to its lowest level in almost two years in November. Raising anticipation that the Bank of England may begin decreasing interest rates in the first half of 2024.
Adding In addition, the recent run of lower Eurozone inflation statistics suggests. That the European Central Bank may drop rates sooner than expected.
The US Core Personal Consumption Expenditure (PCE) Price Index could reveal clues. About the Fed’s policy outlook and provide the XAUUSD a boost.
