The gold (XAU) price rose for the third consecutive trading session, gaining 0.58% and reaching a six-month high.
Possible effects for traders
The U.S. economy continues signalling a slowdown, increasing the chances for interest rate cuts and pulling down the U.S. Dollar Index (DXY). Market sentiment currently shows a 25% probability the Federal Reserve (Fed) might start reducing rates in March 2024, with the likelihood increasing to 45% by May. Recent data revealed a 5.6% decline in U.S. new home sales to 679,000 units in October, lower than the expected 723,000 units. DXY reached its lowest point since late August, making gold more affordable for holders of other currencies. Meanwhile, yields on 10-year Treasury notes remained close to their two-month low of 4.363%. The probability of lowering interest rates decreases the opportunity cost associated with holding non-yielding bullion. However, the most recent data from the physical market shows that China’s net gold imports via Hong Kong fell for a second consecutive month in October as slow economic recovery reduced demand.
XAUUSD was relatively flat during the Asian and early European trading sessions. Today, traders should focus on the release of the U.S. CB Consumer Confidence report at 3:00 p.m. UTC. Lower-than-expected figures will have a positive impact on XAUUSD. However, higher-than-expected numbers may bring the pair down towards 2,000. ‘Spot gold may extend gains into a range of $2,026 to $2,032 per ounce, as it has more or less broken a resistance at $2,016,’ said Reuters analyst Wang Tao.
