Gold price declines from $2070 highs amid market holidays

After touching the pre-holiday highs at $2070, gold retreats to around $2053 per ounce. Gold is being pressured higher by growing investor wagers on looming quicker, more frequent Fed rate cuts in the new year. US inflation is still down, and Treasury yields are easing as risk appetite surges.

On Friday, the Gold Index rose momentarily above $2070 before retreating to the opening bids of the day. The markets are extremely ready for the Federal Reserve to start decreasing interest rates, and investor anticipation of an increased pace of Fed rate cuts in 2024 are being bolstered by the fact that the Fed’s main interest rate is at a 22-year high.

In November, the US Annualized Core Personal Consumption Expenditures (PCE) Price Index increased by 3.2% compared to the same month the previous year. This was a decrease from the previous period’s 3.4% (which was also revised down from 3.5%), and it eased back from market expectations of 3.3%.

The markets are pushing the US Dollar lower and buying up spot gold in anticipation of potential rate cuts from the Fed, which may have been prematurely announced.

The Fed’s dot plot of interest rate expectations indicates a median forecast of 75 basis points in rate cuts through the end of 2024. In contrast, bets on cumulative rate cuts of 160 basis points are already priced in the markets, with some especially keen market participants wagering on a rate cut as early as March of next year.
 

As the markets were preparing for holiday break and close out the final full trading week of 2023, Friday’s early action saw a significant reversal as the US Dollar reduced the day’s losses and Gold returned to its opening bids.

In a final-hour bull run on Friday, Spot Gold surged over 1.10% bottom-to-top before hitting the wall at $2,070 and reverting back towards Friday’s opening at $2,050.

Since last week, when the Gold Index broke above the 200-hour Simple Moving Average at $2,020, intraday movement has been extraordinarily well-bid, above the SMA.

Since Spot Gold bottomed out near $1,820 in early October, a higher-lows pattern has been baked into the Gold Index on daily candles. Long-term technical support comes from the 200-day SMA climbing into $1,960.

The early December run to all-time highs has trapped near-term gold bids in bull territory. Before bearish patterns can start to emerge, the GOLD INDEX needs to drop back below the $2,000 major level.