2023-12-28 02:34:00
Expectations of a rate cut by the Federal Reserve weighed on the dollar, and gold prices extended their gains to hit a three-week high.
In early Asian trading on Thursday (December 28), gold prices gained traction above US$2,070, once hitting a nearly three-week high of US$2,087.65 per ounce. The upward momentum of gold prices was supported by the overall weakening of the US dollar.
Meanwhile, the U.S. dollar index fell to its lowest level since July, near 100.76. U.S. Treasury yields continued to fall to a nearly five-month low on Wednesday before rebounding slightly on Thursday, with the 10-year U.S. Treasury yield currently at 3.807%.
The PCE, the Fed’s favored inflation gauge, fell in November, fueling market bets that the Fed would cut interest rates early. This in turn weighed on the U.S. dollar and provided some support to U.S. dollar-denominated gold. According to CME’s FedWatch tool, markets see a greater than 88% chance of a rate cut in March and a 100% chance of a rate cut in May.
Data released on Wednesday showed that the Richmond Fed Manufacturing Index in the United States was -11 in December, lower than the consensus forecast of -7, and was previously -5. On Thursday, the United States will release weekly jobless claims, which are expected to increase by 210,000 in the week ending December 23.
In addition, major Asian countries intend to expand domestic demand, accelerate economic recovery, promote stable growth, and prevent and resolve risks in key areas. Positive developments in the country’s economic situation might boost gold prices, as the country is a major global gold consumer.
Market participants will focus on Thursday’s weekly U.S. jobless claims, trade balance and November existing home sales reports, but these data may not have a major impact on the market.
Spot gold daily chart
Spot gold was trading at $2,086.50 per ounce at 10:12 Beijing time on December 28
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