Next week’s holidays: Comex February futures ended the week at $2066.90, up 2.4%, as gold prices finished over $2,000 for the fifth consecutive week. Following the release of PCE data on Friday, the dollar lost ground and fell rapidly to five-month lows of 101.4 level. As we approach the final trading week of the year, gold prices are up 13% year over year.
Following the release of the new houses sales statistics, the 10-year US rates recovered to close at 3.90 on Friday, having dropped as low as 3.81%. The weekly loss on the ten-year yields was around 0.75%. At 101.71, the US Dollar Index finished the week 0.83% down.
The core PCE deflator, the Fed’s preferred inflation gauge, increased 0.1% month over month and 3.2% year over year in November, both below estimates. In total, PCE prices increased 2.6% year over year, the weakest growth since February 2021, and decreased 0.1% for the month, the first decrease since April 2020.
While personal income grew by 0.4%, consumer expenditure grew by 0.2% month over month, slightly increasing the savings rate. In November, the statistics for durable goods was likewise rather positive. November saw a 5.4% increase in total orders for durable goods, nearly entirely attributable to an 80% increase in orders for nondefense aircraft.
Next week’s holidays: The Michigan Final consumer sentiment report was another significant release. It increased to 69.7 from 61.3 last month and 69.4 preliminary. The highest point of the year was 71.6 in July, while the lowest point was 61.3 in November. The consumer is in a better mood as the year comes to a finish thanks to declining rates and much reduced gasoline costs. This provides us a good idea that inflation is beginning to decline and that macroeconomic statistics support policymakers’ decision to lower interest rates in 2024.
Due to the week of holidays, most markets are anticipated to see low volume as we approach the last week of 2023 and monitor the beginning of 2024. Tier II data for the US is available, including weekly initial and continuing jobless claims, wholesale inventories in November, and pending home sales in November. These data points are unlikely to significantly affect pricing. Commodities have benefited somewhat from media claims that China’s state-owned banks will be lowering interest rates, and we anticipate that this trend will continue.
Due to the possibility of US Fed rate reduction, geopolitical danger in the Middle East and Red Sea, and a discernible rebound in China’s economic activity, gold is predicted to continue to rise this week.
The $2020/$1985 spot gold support level is. $2100/$2125 is the resistance level.
