After falling short of the $2,080 price level, spot gold bids reversed course and slipped back towards $2,050 as risk appetite soured on continuing misses in US economic data. The US S&P Global Manufacturing Purchasing Managers’ Index (PMI) for December fell below investor expectations, slipping to a four-month low of 47.9 versus the forecast steady print of 48.2 from November. As a result, market sentiment is set to roil as the first US Nonfarm Payroll (NFP) report of 2024 is expected to show US jobs additions easing back slightly from 199K to 168K.
Investors are beginning to soften expectations of rate cuts from the US Federal Reserve (Fed), with median market expectations pricing in around 150 basis points in rate cuts through the end of the year. This stands in sharp contrast to the Fed’s own dot plot of rate expectations, which currently see at most 75 basis points in rate cuts through 2024.
In terms of technical outlook, on the daily candlesticks, XAU/USD remains on the high side, but the bottom is opening up as Gold bugs struggle to hoist Spot Gold back into early December’s rally into all-time-highs near $2,140. Prices remain well-bid above the 200-day SMA near $1,960, and the near-term price floor sits at the 50-day SMA just north of the $2,000 major price handle.
Additional insight: The fluctuating economic data out of the US is causing gold prices to respond to shifts in risk sentiment and expectations for monetary policy. The upcoming NFP report and other key economic indicators are likely to further influence the movement of gold prices in the near term. Additionally, the divergence between market expectations and the Fed’s own projections for rate cuts highlights the uncertainty around future monetary policy actions and their potential impact on gold prices.
