Gold rises as most major central banks increase their bets on rate cuts in early 2024.
The gold price (XAUUSD) maintains a slight purchasing tone in the early European session on Thursday. With price action approaching the top of the previous few days’ trading range.
Investors are increasingly optimistic that the period of major central banks tightening is over. And speculation that rate cuts may occur sooner than previously anticipated is holding bullion sellers at bay.
The cautious market sentiment is adding to the precious metal’s support.
The Federal Reserve (Fed) is widely expected to maintain interest rates steady at its next monetary policy meeting next week. With the market pricing in a rate hike 50% possibility that rate reduction will begin in March of next year.
Investors expect the European Central Bank (ECB) to keep interest rates unchanged on December 14 and to decrease rates by 150 basis points beginning in March next year.
The Bank of Canada (BoC) and the Reserve Bank of Australia (RBA) also struck the pause button earlier this week, adding to signs that the tightening cycles are drawing to an end.
In terms of macroeconomics, ADP Employment statistics released on Thursday revealed that the US labor market is tightening. The focus now shifts to Friday’s Nonfarm Payrolls report to corroborate that assessment.
Daily Digest Market Movers: Gold is being supported by expectations of rate cuts and lower US yields.
ADP Employment data in the United States revealed That the labor market is easing and boosted expectations. that the Fed may be obliged to drop rates sooner than expected.
Investors are now looking forward to the Nonfarm Payrolls report on Friday. Another negative result here could raise chances of Fed rate cuts in early 2024, pushing gold higher.
The CME Group Fed Watch tool forecasts a 99% chance of the Fed holding rates next week. And a 50% possibility of a 25 basis point rate drop in March 2024.
Moreover The Moody’s warning about China’s debt credit rating has reignited concerns about the world’s second largest economy’s stability. Dragging on market mood and offering extra support to the safe-haven gold.
The US Dollar has retreated from Wednesday’s highs as US yields remain at three-month lows. Despite the fact that it is on course for a big increase. Weekly recuperation.
Today’s data show that US Weekly Initial Jobless Claims jumped from 218K to 222K during the week of December 1, contributing to the narrative of a weakening US labor market.
Technical Outlook
Gold prices are trading in a narrow range, with upside attempts limited at $2,040.
The technical picture depicts the XAUUSD pair seeking direction, trading inside a limited range, supported above the important $2,000 mark, but unable to achieve meaningful acceptance as it approaches the $2,040 level.
A look at the four-hour chart reveals that price activity has been stopped below the 50-period SMA. The RSI is bouncing around the 50 level, indicating a lack of clarity as investors anticipate the release of Friday’s Nonfarm Payrolls report
From a broader view, the longer-term bullish trend that began with the early October lows is still in place.
Immediate resistance stands at $2,040, guarding the road to $2,067, ahead of the all-time high of $2,150. A confirmation below $2,000 would invalidate the optimistic perspective and add bearish pressure towards $1,950 and $1,932.
