Gold attracted new investors and received support from dovish Fed predictions.
The gold price (XAUUSD) maintains its modest intraday gains during the early European session. Having already reversed a significant portion of the previous day’s losses. The precious metal is still within striking distance of its best level since May 5. Which was reached on Wednesday, and is currently trading in the $2,043-$2044 range, up almost 0.40% on the day.
There is a growing consensus that the Federal Reserve (Fed) has finished tightening policy. And may begin lowering rates as early as March 2024 turns out to be a crucial element working as a tailwind for the non-yielding yellow metal.
Concerns about a global economic slump are adding to the metal’s appeal.
Meanwhile, dovish Fed views are preventing the US Dollar (USD) from capitalizing on this week’s modest recovery from its lowest level since August 11. Subdued USD price action adds to the gold price amid China’s economic troubles. And a bleak global outlook. However, a generally bullish tone in European equity markets may limit gains for the safe-haven XAUSD. Furthermore, a pair of Fed officials on Thursday pushed back. Against expectations for a swift shift to rate cuts, which may deter bulls from putting new wagers.
Nevertheless, The gold price is on track to close in the green for the third week in a row. As traders await the release of the US ISM Manufacturing PMI later in the early North American session for new impetus. However, the focus will remain on Fed Chair Jerome Powell’s speech. Which may provide some clues about future interest rates and instill some volatility in the markets. This, together with the USD price dynamics, should provide the XAUUSD a boost and allow traders to take advantage of short-term opportunities on the last day of the week.
Daily Digest Market Movers: The gold price continues its steady intraday rise despite Fed rate cut bets and weak USD demand.
Bets that the Federal Reserve will not raise interest rates rates. And may begin easing monetary policy by the first half of 2024. which would continue to support the non-yielding Gold price.
The CME group’s FedWatch Tool predicts that the Fed will decrease policy rates as early as March 2024, with a near 80% chance of doing so at the May FOMC meeting.
Risk-on environment could limit gains ahead of the US ISM PMI and Fed Chair Powell’s address.
The important inflation statistics released on Thursday confirmed the expectations, as the Personal Consumption Expenditures (PCE) Price Index stayed steady in October.
The PCE Price Index recorded the weakest year-on-year growth since March 2021, slowing from 3.4% to 3.0% during the reporting month.
Furthermore, the index that excludes volatile food and energy prices increased by a point. The annual rate of inflation was 3.5% in October, indicating more signs of lowering inflation.
According to another data, jobless claims increased to 218K last week, with 1.93 million people receiving unemployment benefits in the week ending November 18 – the largest in two years.
On Thursday, New York Fed President John Williams stated that it will be necessary to maintain a tight stance for some time in order to restore inflation to the 2% target.
San Francisco Fed President Mary Daly stated that interest rates are in a very good position to control inflation, but she is not considering cuts and believes it is too early to declare whether hikes are complete.
Given the recent confusing signals, the market is paying close attention. will keep an eye on Fed Chair Jerome Powell’s speech, which might inject some volatility and give the XAUUSD a boost.
Traders will also have to deal with the announcement of the US ISM Manufacturing PMI, which is projected to rise to 47.6 in November despite remaining in contraction zone for the 12th consecutive month.
