XAU/USD: A Dance with $2,070 Amid Fed Rate Cut Speculations and Easing US Inflation
On Friday, XAU/USD momentarily surged past the $2,070 mark before retracing towards its initial daily levels. With the Federal Reserve’s interest rate at its highest in 22 years, market anticipation is intensifying for potential rate reductions, especially as US inflation shows signs of retreat. This anticipation fuels expectations for a more rapid pace of Fed rate cuts in 2024.
The US Annualized Core Personal Consumption Expenditures (PCE) Price Index for November indicated a year-over-year increase of 3.2%, a slight decline from the expected 3.3% and down from the previous 3.4% (initially reported as 3.5%).
As US inflation recedes, the market response has been to exert downward pressure on the US Dollar while simultaneously driving up the value of Spot GOLD . This trend reflects market speculation about future Fed rate cuts, potentially outpacing the Federal Reserve’s own projections. The Fed’s own projections suggest a median of 75 basis points in rate cuts by the end of 2024, whereas market expectations are leaning towards 160 basis points, with some forecasts even anticipating a rate cut as early as the coming March.
As the final full trading week of 2023 wrapped up and with the holiday season approaching, Friday saw a notable shift. The US Dollar recovered some of its losses, leading to a pullback in GOLD prices towards the day’s opening levels.
Gold Technical Outlook
Currently, GOLD is exhibiting mild positive movements, maintaining its position above the breached neckline of the double bottom pattern. This stability keeps the bullish implications of this pattern in play, with an initial target at 2065.70.
A breach of this level could pave the way for a rally towards the 2100.00 mark. It’s essential to note that sustaining above 2016.90 is critical for the continuation of this anticipated uptrend.
Today’s trading range is expected to be between the 2035.00 support level and the 2070.00 resistance level, with the trend for the day projected to be bullish.
Gold XAU Live Chart
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