XAU/USD briefly surged to the $2,070 mark on Friday before falling back to initial daily levels. With interest rates at the highest level in 22 years, expectations for a possible rate cut are growing, especially as U.S. inflation shows signs of easing. That expectation has fueled expectations that the Federal Reserve will step up its pace of rate cuts in 2024.
The annualized core personal consumption expenditures (PCE) price index in the United States showed a year-on-year increase of 3.2% in November, which was slightly lower than the expected 3.3% and lower than the previous 3.4% (preliminary report was 3.5%).
As U.S. inflation recedes, the market has responded by putting downward pressure on the U.S. dollar while pushing up the value of spot gold. The trend reflects market speculation about future interest rate cuts from the Fed, which may be deeper than the Fed’s own forecasts. The Fed’s own forecasts point to a median rate cut of 75 basis points by the end of 2024, while market expectations are leaning towards 160 basis points, with some forecasts even predicting a rate cut as early as March next year.
Friday saw notable changes as the last full trading week of 2023 comes to an end and the holidays approach. The U.S. dollar regained some of its losses, causing gold prices to fall back to the day’s opening levels.
Gold Technology Outlook
Currently, gold is showing a mildly positive trend, holding above the neckline of a double bottom pattern. This stability keeps the bullish implications of the pattern in play, with an initial target at 2065.70.
A break above this level could pave the way for a rebound towards the 2100.00 mark. Notably, sustaining above 2016.90 is critical to continuing this expected uptrend.
Today’s trading range is expected to be between the 2035.00 support and 2070.00 resistance, with a bullish trend expected for the day.