During the early Asian trading hours on Wednesday, the price of gold (XAU/USD) has consolidated its recent gains, hovering around the $2,040 mark. Despite remaining capped below the $2,050 barrier, the yellow metal is poised for potential upward movement in light of a weaker US Dollar (USD) and lower US Treasury bond yields, particularly in the lead-up to the holiday season.
Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee dismissed expectations of imminent interest rate cuts, stating on Monday that the central bank is not precommitting to such measures. Goolsbee emphasized that the recent surge in market expectations for rate cuts is inconsistent with the typical functioning of the Fed. This follows New York Fed President John Williams’ remarks last week, asserting that discussions about rate cuts are not currently underway.
On the economic front, Tuesday’s data from the US Census Bureau indicated a decline in Building Permits to 1.46 million from 1.498 million, falling slightly below the market consensus of 1.47 million. However, Housing Starts for November rose to 1.56 million from 1.359 million, surpassing the market expectation of 1.36 million. The positive November Housing Starts figures reflect robust buyer demand, supported by decreasing mortgage rates.
Turning attention to China, the country’s economic outlook for 2024 appears optimistic, with more favorable conditions and opportunities than challenges. The International Monetary Fund (IMF) has revised upward its growth forecast for China to 5.4% this year, citing a strong recovery from the impact of the COVID-19 pandemic. The positive development in China’s economy holds significance for the gold market, given China’s status as the world’s largest gold consumer.
Additionally, the People’s Bank of China (PBoC) is expected to maintain its lending benchmark rates unchanged, according to a Reuters survey conducted ahead of the monthly fixing on Wednesday.
Gold traders are closely monitoring the PBoC rate decision in anticipation of the US Existing Home Sales data scheduled for Wednesday. Looking ahead to the end of the week, market participants will focus on the release of the US Gross Domestic Product Annualized for the third quarter (Q3) on Thursday and the Core Personal Consumption Expenditures Price Index (PCE) on Friday. These events are likely to provide cues for traders seeking opportunities in the gold market.
