Gold consolidating near the weekly high, despite a minor USD rise and a risk on mood.

The gold price (XAUUSD) struggles to capitalize on its two-day weekly advances. And oscillates in a narrow trading band throughout the first half of the European session on Wednesday. The US Dollar (USD) gets modest purchasing and recovers some of the previous day’s losses. Amid uncertainties about when the Federal Reserve (Fed) would start relaxing. Its fiscal policy. This, together with the prevailing risk-on environment, is viewed as another impediment to the safe-haven precious metal.

The downside for gold appears to be limited in the aftermath of increased wagers on the Fed’s policy stance changing soon. Indeed, markets are now pricing in a higher probability of an interest rate decrease as early as March 2024. With a total of 140 basis points cut until the end of next year. This keeps US Treasury bond yields close to a multi-month low. Aside from that, worries about geopolitical dangers associated. With the Middle East conflict suggest that the route of least resistance for the non-yielding yellow metal is to the east. Traders, on the other hand, appear hesitant to make aggressive directional wagers. And prefer to stay on the sidelines ahead of the release of the Fed’s favorite inflation indicator. The US Core Personal Consumption Expenditure (PCE) Price Index, on Friday.

The key US inflation number should affect the Fed’s future policy decisions and push the USD, giving the gold price a boost. Meanwhile, the Conference Board’s Consumer Confidence Index, as well as the presence of Chicago Fed President Austan Goolsbee, may provide short-term trading opportunities on Wednesday.

Market Movers: Gold price bulls take a breather ahead of the US PCE Price Index on Friday.

The growing expectation that the Federal Reserve (Fed) will abandon its aggressive approach early next year continues to operate as a catalyst. a tailwind for the Gold price.

Chicago Fed President Austan Goolsbee stated that the central bank is not committing to cutting interest rates anytime soon and that the market should not be pressured.

On Monday, Cleveland Fed President Loretta Mester acknowledged. That financial markets have gotten a little ahead of the central bank in terms of when to expect interest rate reduction next year.

Markets, on the other hand, have priced in a more than 60% likelihood. That the Fed will lower rates as soon as March 2024, and a total of 140 basis points in 2024.

The benchmark 10-year US government bond yield is below 4%. And the US Dollar is slightly above a multi-month low reached last week.

The fundamental environment is favorable to bullish traders and promotes the probability of further increases.

The The global risk-on surge has continued despite predictions of lower interest rates in the United States. Additional stimulus from China, and a dovish Bank of Japan, capping the safe-haven metal.

Traders are now looking for some momentum from the US Consumer Confidence Index. Which will be released later this Wednesday. Though the focus remains on the release of the US PCE Price Index on Friday.