On Friday (December 20th), during the Asian market's early session, spot Gold fluctuated narrowly, currently trading around $2593.38 per ounce. After being blocked on Thursday, Gold prices fell back; earlier in the trading session, they had once risen to around $2626.33 per ounce but closed below the $2600 mark, finishing at $2594.28 per ounce. US data reinforced market expectations for the Federal Reserve's cautious easing policy in the coming year, and the USD and US ten-year Treasury yields continued to rise, applying pressure on Gold prices.
Data shows that the growth rate of the US economy in the third quarter exceeded expectations, and the decrease in the number of unemployment claims also surpassed predictions.
Specifically, data shows that the number of initial unemployment claims in the US decreased by 0.022 million, a drop that exceeded forecasts, nearly reversing the increases of the previous two weeks, suggesting that the labor market is still gradually slowing down. As of the week ending December 7th, the number of continuing unemployment claims, which reflects hiring conditions, fell by 5000, seasonally adjusted to 1.874 million.
The US Department of Commerce's Bureau of Economic Analysis reported that the final value of third-quarter GDP growth rate was revised up to 3.1%. The previous value was 2.8%.
Economists had previously predicted that the GDP data would not be revised. The latest report showed upward revisions in consumer spending data and downward revisions in trade deficit data, which overshadowed the impact of the downward revision in inventory accumulation data. The economic growth rate for the April to June quarter was 3.0%. Federal Reserve officials believe that a GDP growth rate around 1.8% will not lead to rising inflation.
Consumer spending, which accounts for more than two-thirds of economic activity, was revised up to a growth of 3.7%, the fastest growth in a year and a half, compared to the previous value of 3.5%.
Bart Melek, head of commodity strategy at TD Securities, said: "These GDP data and unemployment claims show that the data is quite robust," he added that a strong economy and inflation risk further prove that the Federal Reserve has no reason to be aggressive, which traditionally is not favorable for non-yielding Gold.
The USD, which measures the dollar against six rival currencies, peaked at 108.480 during trading on Thursday, surpassing the previous day's high of 108.180, marking the highest level since November 2022; it closed at 108.42 on Thursday, an increase of about 0.15%.
This week, several central banks are holding their last policy meetings of 2024. The Bank of Japan maintained its interest rates as expected, while the Bank of England held rates steady at 4.75% on Thursday.
UBS Group's Forex strategist Vassili Serebriakov in New York stated, "The main focus is on the decisions from various central banks, which are generally very favorable for the dollar. The Fed's hawkish rate cuts and the Bank of Japan's dovish stance may be the two main driving factors."
Ronald Temple, Chief Market Strategist at Lazard in New York, said: "Since the election, U.S. interest rate expectations have risen, but outside the U.S., interest rate expectations have fallen for both the European Central Bank and most other central banks. This has created a strong dollar, as the widening interest rate gap benefits the U.S., so I believe we should expect the dollar to strengthen further, as I do not think the interest rate market or MMF has fully digested the impact of tariffs."
The U.S. 10-year Treasury yield hit a high of 4.594% on Thursday, the highest level since the end of May, and rose by 7.6 basis points to 4.574% at the close; it jumped over 11 basis points on Wednesday.
However, Vinny Bleau, head of fixed income Capital Markets at Raymond James, stated: "I think the bond market is quite volatile... I certainly think we are somewhat oversold, especially with the Personal Consumption Expenditures (PCE) price index data set to be released on Friday. Since early December, we have seen 10-year yields rising sharply, compared to the lowest level of 4.18%. I believe there will be some pullback... re-testing 4.30%."
According to calculations from the London Stock Exchange Group (LSEG), U.S. Interest Rates futures pricing indicates that the U.S. is expected to cut rates by only 37 basis points by 2025, or one to two rate cuts. The earliest is anticipated to occur in June's meeting, with a likelihood of 65%, whereas the probability for a rate cut in January is only 8.6%.
Investors are awaiting the core PCE data set to be released on Friday (the Fed's preferred inflation indicator) for further clues about the economic outlook. The market expects that the index will show a month-on-month increase of 0.2% for both the overall and core PCE price indexes in November, with year-on-year increases expected to be 2.5% and 2.9% respectively (previous values were 2.3% and 2.8%), which is likely to continue to suppress Gold prices.
From a technical perspective, Gold prices have closed below the 100-day moving average and the 2600 level for two consecutive days. After a rebound on Thursday was hindered, this suggests strong Ask pressure above. The MACD and KDJ indicators are indicating a death cross, and Gold prices face further downside risk in the future, with an initial target looking toward the November 14 low around 2536.68, and a long-term target likely toward the 200-day moving average, currently around 2471.97.
However, on Thursday, Gold prices still recorded an increase, with some Bid support also existing around 2580. There is a possibility of further rebound adjustments in the short term, with initial resistance above at the 2600 level and the 100-day moving average resistance at 2606.98; the 5-day moving average resistance is around 2614.40. A close above this position is needed to weaken the bearish signals for the future.
As of 07:53 Beijing time, spot Gold is currently quoted at 2592.51 USD/ounce.
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