Gold prices have pared some gains, trading around $2,628 after hitting a high of $2,658, even as treasury yields decline and the U.S. dollar remains weak.
Key Findings from U.S. PCE Data
The U.S. Personal Consumption Expenditures (PCE) data for October 2024 showed that the PCE price index rose by 2.3% year-on-year, up from 2.1% in September, indicating a slight increase in inflation. The core PCE index, which excludes food and energy, climbed by 2.8%. Both personal income and spending increased, primarily driven by services such as health care and housing, while spending on goods declined. These inflation figures suggest that the Federal Reserve may reconsider interest rates since inflation continues to exceed their 2% target.
Economic Growth Indicators and Labor Market Strength
The U.S. economy grew at an annualized rate of 2.8% in the third quarter of 2024, slightly down from 3.0% in the previous quarter. Core durable goods orders (excluding transportation items) rose by 0.6% in October, indicating continued strength in business investment and consumer demand. Additionally, jobless claims decreased to 210,000, suggesting a tighter labor market, as employers are retaining workers amid uncertain economic conditions. Overall, these indicators hint at a stable economy with positive growth signs.
Impact on Federal Reserve Rate Decisions
The strong PCE figures and robust durable goods orders diminish the likelihood of aggressive rate cuts by the Federal Reserve. According to CME Fed funds rate data, the probability of a 25 basis point rate cut has increased to 66.50% from 55.70% just a week earlier.
Technical Outlook for Gold Prices
Technically, gold prices are below both short-term and long-term moving averages, indicating a bearish trend. Immediate support is at $2,600, with potential declines targeting $2,570, $2,536, and $2,500. Resistance is seen at $2,640; if broken, prices could rise toward $2,660 and above. A recommended strategy is to sell on rallies around $2,648–50, with a stop-loss at $2,670 and a target price at $2,600.
