Gold Price Forecast: XAU/USD gains momentum toward a record close above $2,070 amid the USD weakness
- Gold price trades in positive territory for the fifth straight day on Thursday.
- The decline in the Federal Reserve's preferred gauge of inflation triggered the bets on early rate cuts by the Fed.
- China intends to enhance domestic demand to expedite economic recovery and promote stable growth.
Gold price (XAU/USD) gains traction above a record close of $2,070 during the early Asian session on Thursday. The upward momentum of yellow metal is bolstered by the softer US Dollar (USD) across the board. Gold price currently trades near $2,080, gaining 0.09% on the day.
Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD against a weighted basket of currencies used by US trade partners, drops to its lowest level since July near 100.85. The Treasury yields edge lower, with the 10-year yield standing at 3.80%.
The decline in November’s US Core Personal Consumption Expenditure Price Index (PCE), the Federal Reserve's preferred gauge of inflation, triggered the bets on early rate cuts by the Fed. This, in turn, weighs on the Greenback and lends some support to USD-denominated gold. The markets are pricing in more than 88% odds of a rate cut in March and fully pricing in a rate cut in May, according to the CME Fedwatch tool.
Data released on Wednesday revealed that the US Richmond Fed Manufacturing Index came in at -11 in December versus -5 prior, below the market consensus of -7. On Thursday, the US will report weekly Jobless Claims figures, which are expected to show an increase of 210K in the week ending December 23.
Furthermore, China intends to enhance domestic demand to expedite economic recovery and promote stable growth. The nation will also prevent and resolve risks in key areas. The positive developments surrounding China’s economic condition might boost gold, as China is the world’s major gold consumer.
Market players will focus on the US weekly Jobless Claims, Trade Balance, and the November Pending Home Sales report on Thursday. However, these figures might not have a significant impact on the market.