As trading begins in the final week of 2023, the price of gold XAU/USD is on the rise as traders look to potential US interest rate cuts from the Federal Reserve in 2024, which has weakened the US dollar. Overall, gold prices are trading near a record high, on track to post their first annual gain in three years. Moreover, data showing a slowdown in US inflationary pressures has bolstered expectations for multiple interest rate cuts in 2024.
Today, gold prices XAU/USD are holding around the resistance level of $2,069 per ounce.
Last week's report showed that the Federal Reserve's preferred measure of core inflation rose only slightly last month and – by one measure – even lagged behind the policymaker's target of 2%. As a result, swap markets now expect a greater than 80% chance of a US rate cut by March, which would be positive for non-interest-bearing assets like gold, although some Fed officials have pulled back from the prospect of early easing.
According to trading, the price of gold rose to $2,069 per ounce, after rising by 1.7% last week. Similarly, bullion prices closed at a record high of $2,072.22 on December 1. Also, the Bloomberg Dollar Spot Index fell 0.1%. Silver and palladium prices rose, while platinum prices stabilized.
On another level, Wall Street market indices are coming out of their eighth consecutive week. With less than a week left in 2024, the S&P 500 is now up more than 24% for the year, while the Nasdaq is up more than 43%. Furthermore, investors were encouraged by reports that showed inflation was declining even as the economy appeared stronger than expected.
In general, the Federal Reserve is in an unenviable position, seeking to slow down the economy sufficiently by raising interest rates to curb inflation but not to the extent that it pushes the country into a recession. Principally, traders still bet that the US Federal Reserve will cut the main interest rate by at least 1.50 percentage points by the end of next year, according to data from the CME Group. Currently, the federal funds rate ranges between 5.25% and 5.50%, at its highest level in over two decades. Moreover, the Federal Reserve had earlier issued projections this month showing that policy makers expect to cut the federal funds rate several times next year, but it is likely to be only half of what Wall Street markets expect.
Gold Price Forecast and Analysis Today:
There is no change in my technical outlook for the performance of the gold price XAU/USD as the overall trend remains bullish as long as it remains stable above the psychological resistance of $2000. As mentioned before, the continued weakness of the US dollar may give bulls the opportunity to move higher regardless of technical indicators moving towards overbought levels, aiming for the first predicted peak. Now, the focus is on levels of $2070 and $2085 per ounce. On the other hand, it is essential to consider the possibility of profit-taking selling operations at any time if sentiment towards the currently weak US dollar improves. Shortly, movements may remain within narrow ranges due to low liquidity during the annual holiday season.
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