Gold is reaching a two-week high due to bets on a protracted Fed pause.
The gold price (XAUUSD) is trading with a positive bias for the second day in a row on Friday. Marking the fourth day of a five-day rise, and is currently trading just below a nearly two-week high reached the previous day. The incoming macro data from the United States (US) has cemented expectations on the Fed taking a long break. Fed (Federal Reserve). Furthermore, markets are beginning to anticipate interest rate cuts, maybe in the first half of 2024. Which has contributed to the recent decrease in US Treasury bond yields. And continues to operate as a tailwind for the non-yielding yellow metal.
Dovish Fed predictions, the gold price attracts some follow-through purchases.
Meanwhile, dovish Fed predictions are failing to help the US Dollar (USD) recover from its lowest level since September 1st. Which was reached in the aftermath of lower US consumer inflation numbers on Tuesday. Aside from that, contradictory signals from high level US China discussions appear to be another factor benefiting the safe haven Gold price. And increasing expectations for further near-term appreciation. Nonetheless, the XAUUSD is on course to gain about 2.5% in a week. And snapping a two-week losing skid and reaching its lowest level since October 18 on Monday.
Daily Market Movers: The gold price continues to benefit from dovish Fed predictions and a weak US dollar.
Gold has already recovered more than $50 from a multi-week low. Which was reached on Monday in the aftermath of speculations that the Federal Reserve will stop rising interest rates.
The US CPI report issued earlier this week indicated that consumer inflation was falling quicker than expected, while the US Jobless Claims report released on Thursday indicated that the labor market was cooling.
The headline CPI remained constant in October, while the annual rate rose at its slowest pace in two years, slowing to 3.2% from 3.7% in September.
The quantity Americans filing for unemployment benefits for the first time increased to 231K for the week of November 11 from 218K the previous week (updated from 217K).
Furthermore, the recent drop in oil prices is projected to have a deflationary effect, bringing the Fed closer to its 2% target and allowing it to ease its aggressive attitude.
This week, a wave of influential Fed officials hailed progress in containing inflation, supporting the notion that the policy-tightening effort may soon be over.
Traders appear to be convinced that interest rates in the United States will not rise further. Furthermore, the CME Group’s FedWatch Tool predicts that the first rate drop will occur in March 2024.
The benchmark 10-year US government bond rate fell. On Thursday, it fell to a near two-month low, undermining the US dollar and supporting the gold price.
US President Joe Biden and Chinese President Xi Jinping agreed to restore military lines.
US President Joe Biden and Chinese President Xi Jinping agreed to restore military lines. Resulting in some improvement in relations between the world’s two largest economies.
Biden dubbed Xi a “dictator” hours after the summit, which may have irritated Chinese officials.
Traders are now looking for short-term opportunities on the penultimate trading day of the week in the US housing market data. And a speech by Chicago Fed President Austan Goolsbee.
