Gold price extends the range play below multi-month top ahead of US PCE Price Index

11/30/2023 08:37:15 GMT|ByHaresh Menghani

Gold price oscillates in a narrow trading band through the early European session.
A further USD recovery from a multi-month peak acts as a headwind for the metal.
Fed rate cut bets and China's economic woes might continue to offer some support.
The US PCE Price Index should provide some meaningful impetus to the XAU/USD.

Gold price (XAU/USD) struggles to gain any meaningful traction through the early European on Thursday and consolidates its recent strong gains to its highest level since May 5 touched the previous day. Traders now seem reluctant and prefer to wait for the key inflation reading from the United States (US) before placing fresh directional bets. The US Personal Consumption Expenditures (PCE) Price Index is due for release later during the North American session and might influence the Federal Reserve's (Fed) next policy move. This, in turn, will drive the US Dollar (USD) demand and provide some meaningful impetus to the non-yielding yellow metal.

Heading into the key data risk, some repositioning trade assists the Greenback to build on the overnight modest recovery from its lowest level since August 11. Apart from this, a positive tone around the US equity futures acts as a headwind for the safe-haven Gold price. That said, growing acceptance that the Fed is done with its policy-tightening campaign and may start cutting rates as soon as March 2024 might keep a lid on any meaningful appreciating move for the buck. This, along with China's economic woes, lends some support to the XAU/USD.

Daily Digest Market Movers: Gold price extends its sideways consolidative price move near multi-month peak

The recent remarks from several Federal Reserve officials suggested that the central bank may be done raising interest rates and continue to act as a tailwind for the Gold price.
Fed Governor Christopher Waller flagged a possible rate cut in the months ahead and Cleveland Fed President Loretta Mester saw clear progress in getting inflation to 2%.
The markets are now pricing in a cumulative 100 bps of rate cuts by the Fed in 2024, which is reinforced by a further decline in the US Treasury bond yields.
The yield on the benchmark 10-year US government bond, which breached 5% in October for the first time in 16 years, languishes near its lowest level since September 14.
Furthermore, the yield on the rate-sensitive two-year US Treasury note is at its lowest since July, though some repositioning trade pushes the US Dollar hgiher and caps the XAU/USD.
The second estimate of the US GDP showed that the world's largest economy grew by a 5.2% annualized pace during the third quarter as compared to the 4.9% reported previously.
The upbeat US macro data did provide a modest lift to the USD on Wednesday, though dovish Fed expectations should keep a lid on any meaningful recovery from a multi-month low.
The latest data published by the National Bureau of Statistics (NBS) showed that China’s Manufacturing PMI ticked down to 49.4 in November from 49.5 in the prior month.
The non-manufacturing PMI dropped to 50.2 in November from the 50.6 previous, fueling concerns about the worsening conditions in the world's second-largest economy.

Technical Analysis: Gold price remains on track to retest all-time high, around the $2,079-2,080 zone set in May

From a technical perspective, the Relative Strength Index (RSI) on the daily chart is holding above the 70 mark, pointing to slightly overbought conditions and holding back bulls from placing fresh bets. That said, any meaningful corrective slide is more likely to attract fresh buyers near the overnight swing low, around the $2,035 region. This is followed by support near the $2,020 area and the $2,010-$2,008 strong horizontal resistance breakpoint.

The latter should act as a strong base for the Gold price, which if broken decisively should pave the way for deeper losses. On the flip side, the multi-month peak, around the $2,052 area touched on Wednesday, now seems to act as an immediate hurdle for the Gold price. A sustained strength beyond should allow bulls to aim back towards challenging the all-time high, around the $2,079-2,080 zone set in May.

US Dollar price this month

The table below shows the percentage change of US Dollar (USD) against listed major currencies this month. US Dollar was the weakest against the New Zealand Dollar.

	USD	EUR	GBP	CAD	AUD	JPY	NZD	CHF
USD		-3.70%	-4.52%	-2.20%	-4.78%	-2.86%	-6.41%	-4.24%
EUR	3.56%		-0.79%	1.47%	-1.05%	0.82%	-2.61%	-0.52%
GBP	4.33%	0.78%		2.24%	-0.26%	1.59%	-1.81%	0.28%
CAD	2.16%	-1.48%	-2.27%		-2.54%	-0.63%	-4.11%	-2.00%
AUD	4.57%	1.04%	0.26%	2.46%		1.83%	-1.54%	0.53%
JPY	2.77%	-0.82%	-1.62%	0.65%	-1.89%		-3.47%	-1.31%
NZD	6.02%	2.55%	1.77%	3.97%	1.52%	3.34%		2.05%
CHF	4.07%	0.51%	-0.27%	1.96%	-0.54%	1.31%	-2.08%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Economic Indicator

United States Personal Consumption Expenditures - Price Index (MoM)

The Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US).. The MoM figure compares prices in the reference month to the previous month. Price changes may cause consumers to switch from buying one good to another and the PCE Deflator can account for such substitutions. This makes it the preferred measure of inflation for the Federal Reserve. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.

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