- Summary:
- A looming shitdown of the US Federal government expenditure and soft PCE index data have injected fresh impetus into gold price.
Gold price rose for the second successive session on Friday, rising by 1.1 percent to trade at $2,625 at the spot market at the time of writing. The yellow metal’s upside is propelled by this week’s Fed interest rate cut and a soft US Personal Consumption Expenditure (PCE) index.
Fed shutdown and PCE data provide fuel for gold price
The US dollar is still under pressure after the Federal Reserve announced a 25 basis points cut on interest rates in line with market expectations. Also, the move drove US treasury bond yields lower, with benchmark 10-year bonds down by 6.8 basis points to stand at 4.50%. That eases downward pressure on non-yielding gold.
Meanwhile the risk of a Federal government shutdown in the US adds propulsion to gold prices due to the metal’s safe haven status. Failure by the Congress to pass a bill approving government spending by 11.59 pm on Friday will lead to a halt in Federal Government spending, which could threaten US economy’s growth traction. That could add downward pressure to the dollar and increase demand for gold.
Meanwhile, US core PCE data for November printed out at 0.1%, down from October’s 0.3% and below the forecast 0.2%. That added confidence that inflation remains under control, adding downward pressure on the dollar.
Gold price prediction
Gold price pivots at $2,622 and the RSI indicator signals that the upside will prevail if XAUUSD action stays above that level. The momentum will likely envounter initial resistance at $2,635. However, the metal could break above that level and test $2,648 if the buyers extend their control.
Conversely, moving below $2,622 will signal the onset of control by the sellers. That will likely see the first support established at $2,610. However, a stronger downward momentum could break below that level and invalidate the upside narrative. Also, the momentum could porentially extend the downside and test the second support at $2,595.
