On Thursday (November 28), during the Asian market session, the price of spot gold experienced slight fluctuations, currently trading around $2,636.88 per ounce. This week, the gold market has undergone significant fluctuations, from a sharp drop at the beginning of the week to a subsequent moderate rebound, with market sentiment clearly driven by the weakening dollar and key economic data.
Weakening Dollar Boosts Gold Price Rebound
On Wednesday, spot gold saw a slight increase, reaching a high of $2,658 at one point. However, gains narrowed after inflation data suggested the Federal Reserve might be cautious about further rate cuts. By the close on Wednesday, gold was priced at $2,635.80 per ounce. Meanwhile, the dollar index fell by 0.8% that day, reaching a two-week low of 106.14, enhancing the appeal of gold to non-dollar holders. The market estimates a 70% probability of the Federal Reserve cutting rates by 25 basis points in December. In a low-interest environment, non-yielding assets like gold are typically favored.
Economic Data Sends Mixed Signals
Recent data shows that U.S. consumer spending grew by 0.4% in October, slightly surpassing market expectations, indicating economic resilience. However, the cooling process of inflation appears to have stalled. The Personal Consumption Expenditures (PCE) price index rose by 0.2% month-on-month, and the core PCE increased from 2.7% to 2.8% year-on-year, still above the Federal Reserve's 2% inflation target. This result leaves the market cautious about the extent of future Federal Reserve rate cuts.
Additionally, signs of weakness in the employment market have raised concerns about a potential economic slowdown. Although initial jobless claims in November fell to 213,000, the lowest since April, continuing claims rose to 1.907 million, the highest in two years. This indicates that some unemployed individuals may find it difficult to re-enter the labor market. Employment data will play an important role in the Federal Reserve's December decision.
Thanksgiving Markets Turn Cautious
As the U.S. market enters the Thanksgiving holiday mode, trading activity has noticeably lightened. Most investors choose to close positions or take a wait-and-see stance ahead of the long weekend, avoiding new risk exposures. On Monday, gold experienced a drop of over $100 due to reduced safe-haven demand following a ceasefire agreement between Israel and Hezbollah in Lebanon, but a subsequent decline in the dollar and demand for price correction provided some support for gold.
Analysts pointed out that although the decline in the dollar and U.S. Treasury yields may provide some support for gold prices, technically, prices are still subjected to resistance from multiple moving averages, and future trends depend on further economic data and geopolitical dynamics.
Trump's Tariff Plans Raise Inflation Concerns
Trump recently stated that he plans to impose a 25% tariff on imports from Mexico and Canada and an additional 10% on Chinese goods on his first day in office. If implemented, this move could increase inflationary pressure. According to Goldman Sachs estimates, this would add 0.9 percentage points to the core PCE price index increase. Rising inflation risk can potentially limit the Federal Reserve's future rate-cutting space, while also providing potential support for the gold market.
Cautious Trading Amid Multiple Variables
On the eve of Thanksgiving, the market faces numerous uncertainties, and investors need to be wary of further changes in inflation data and the impact of Federal Reserve policy statements. In the short term, the direction of the dollar and fluctuations in U.S. Treasury yields will be key factors affecting gold prices. Meanwhile, geopolitical situations and potential tariff risks may also add new uncertainties to the market. Analysts suggest investors closely monitor price changes when market liquidity resumes after the holiday.
