Gold gets some dip-buying as the US dollar falls somewhat.
The gold price (XAUUSD) edged higher during the Asian session on Monday. Seemingly halting last week’s slight decline from the $2,050 area. Last Wednesday, the Federal Reserve (Fed) marked the end of its monetary policy tightening cycle. And the so-called “dot plot” projected at least three 25 basis point (bps) rate cuts in 2024. As a result, the US Dollar (USD) is unable to recover. build on Friday’s encouraging recovery. Advance from its lowest point since July 31. Aside from that, geopolitical dangers and concerns about a deeper economic crisis. Notably in China and the Eurozone, help to propel the safe-haven precious metal.
Nonetheless, top Fed officials attempted to cool talk about early interest rate decreases on Friday. This, combined with the current risk-on atmosphere, may hold any major appreciation in the gold price at bay. Against the backdrop of the Fed’s dovish move last week, China’s Central Finance Office’s upbeat prognosis continues to enhance investors’ confidence. This is obvious from the overall optimistic tone in the equity markets and should limit the upside for the XAUUSD in the absence of any meaningful news. US economic data that moves the market. However, the downside is still cushioned as a result of the Fed’s dovish move last week.
Daily Market Movers: The gold price is supported by Fed rate decrease bets and a lower dollar.
In an interview with CNBC on Friday, New York Federal Reserve President John Williams stated that we aren’t actually talking about rate reduction right now and that it is premature to speculate about them.
William noted that economic data might change in unexpected directions, and the central bank must be prepared to tighten policy further if inflationary trend stalls or reverses.
Separately, Atlanta Fed President Raphael Bostic reinforced the sentiment, stating that rate cuts were not imminent and that the economy was in good shape. The first layoffs could occur in the third quarter of 2024.
The markets, on the other hand, appear convinced that the Fed would loosen policy by the first half of 2024, limiting the US Dollar’s comeback from a four-month low and lending support to the Gold price.
According to the flash PMI data released on Friday, business activity in Germany deteriorated in December. Raising the possibility of a recession in the Eurozone’s largest economy.
Geopolitical tensions and the threat of a recession also boost the safe-haven gold.
On Monday, North Korea launched at least one unspecified type of ballistic missile. Barely hours after launching a short-range missile late Sunday night.
According to a government readout cited by China’s state media Xinhua. The economy is likely to have more favorable conditions and chances than problems in 2024. This, together with the Fed’s dovish tilt, supports the underlying positive sentiment in global equities markets and may keep the safe haven precious metal under control.
