28/11/24

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The price of gold (XAU/USD) continued its decline during the Asian session on Thursday, following a downward movement from the $2,658 range. Recent economic data from the United States indicated a robust economy, alongside stagnated inflation rates, which may lead the Federal Reserve to adopt a careful stance regarding future interest rate cuts. This situation has contributed to a slight rebound in US Treasury bond yields, enhancing demand for the US Dollar and placing additional pressure on the non-yielding gold.

Market expectations still lean towards a potential 25 basis point reduction in borrowing costs by the Federal Reserve in December. Moreover, anticipated tariffs proposed by the US President-elect have raised concerns of a renewed trade conflict between major global economies, posing risks to economic growth worldwide. Persistent geopolitical tensions, particularly surrounding the ongoing Russia-Ukraine situation, support gold’s status as a safe-haven asset, enabling prices to remain above the $2,600 threshold.

Recent reports from the US Bureau of Economic Analysis indicated that the Personal Consumption Expenditures (PCE) Price Index rose to 2.3% year-on-year in October, up from 2.1% in September. The core PCE Price Index, which excludes food and energy, increased 0.3% month-on-month, climbing from 2.7% to 2.8%. Additionally, data from the US Commerce Department revealed a 2.8% annual growth rate in the third quarter, bolstered by a 3.5% rise in consumer spending.

On the employment front, new unemployment claims fell by 2,000 to a seasonally adjusted 213,000 for the week ending November 23. This reduction has somewhat alleviated the disappointment of October’s Durable Goods Orders, which grew by just 0.2%, below the anticipated 0.5%. Amid these economic signals, concerns remain that the incoming administration’s policies may provoke inflationary pressures, leading the Federal Open Market Committee to reconsider its easing strategy if inflation trends upward.

With the benchmark 10-year US Treasury yields recovering from recent lows, the US Dollar has slightly rebounded, further influencing gold prices. For gold market participants, a significant drop below the $2,600 level is essential for new bearish positions, with technical indicators reflecting a potential downward trajectory. However, a consistent move above the Asian session’s peak around $2,638 – 2,639 could revive bullish sentiment, pushing the price towards the $2,677 – 2,678 resistance level and beyond, to potentially reach the $2,700 milestone.