Gold Price (XAU/USD) experienced a slight retreat, pulling back from the $2,070 level tested on Friday as markets entered a pre-holiday lull. The precious metal’s ascent was propelled by increasing investor expectations of swifter and more frequent Federal Reserve rate cuts. With the Fed’s main interest rate at a 22-year high, speculation grows regarding potential rate adjustments in 2024, particularly amid easing US inflation.
In November, the US Annualised Core Personal Consumption Expenditures (PCE) Price Index rose by 3.2%, slightly below market predictions and a decline from the previous period’s 3.4%. This diminishing inflation, coupled with the anticipation of aggressive Fed rate cuts, exerts downward pressure on the US Dollar and elevates Spot Gold prices.
While Gold briefly surpassed $2,070, it retraced towards the day’s opening bids as the market prepared for the holiday season. The discrepancy between the Fed’s projected rate cuts and market expectations—currently pricing in more aggressive cuts—adds uncertainty to the economic outlook.
Technically, Gold has shown resilience, maintaining an upward trajectory above the 200-hour Simple Moving Average (SMA) since last week’s breakout near $2,020. A pattern of higher lows on daily candles has emerged since October, with long-term support from the rising 200-day SMA around $1,960. For bearish patterns to materialize, XAU/USD would need to fall below the significant $2,000 handle.
As the markets conclude the final trading week of 2023 and anticipate a holiday break, Gold’s retreat underscores the delicate balance between economic indicators, market sentiment, and the potential impact of evolving Federal Reserve policies on precious metal Gold prices.
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