In Wednesday’s trading session, the XAU/USD Gold spot price underwent a notable downward trend, currently registering at around $2,030. Market observers note that buyers appear to be exercising caution, taking a step back to consolidate gains, especially given the elevated price levels not seen since May.
Investors are maintaining a watchful stance as they eagerly anticipate the release of the US Personal Consumption Expenditures (PCE) figures from November, scheduled for Friday. This particular economic indicator holds significant weight for the Federal Reserve as it serves as a key measure of inflation. The outcome of the PCE figures is expected to influence the trajectory of metal prices, potentially validating the market’s anticipation of earlier-than-expected rate cuts by the Fed in 2024.
Concurrently, the Federal Reserve’s dovish policy shifts have contributed to weakened US yields, offering a protective buffer to the precious metal. The decline in US Treasury bond yields is known to alleviate the opportunity cost of holding non-yielding metals. Presently, the 2-year rate hovers at 4.40%, while the 5 and 10-year yields stand at 3.85% and 3.84%, respectively—the latter marking a low not witnessed since July. This trend underscores the intricate relationship between monetary policy and the performance of gold in the current economic landscape.
