Gold Price Forecast: XAU/USD stages mild recovery below $2,000, US PCE data eyed
|- Gold price rebounds to $1,985 amid lower US Treasury yields, weaker USD.
- The US economy showed an expansion in the third quarter.
- Market players will monitor the US core Personal Consumption Expenditures Price Index (PCE) on Friday.
Gold price stages a mild recovery during the early Asian trading hours on Friday. The rebound of the precious metal is supported by the lower Treasury yields. Gold price currently trades near $1,985, up 0.05% for the day.
Meanwhile, the US Dollar Index (DXY), the value of the USD relative to a basket of global currencies, drops to 106.58 after reaching 106.90. The US Treasury bond yields edge lower on Friday, with the 10-year US Treasury yield declining to 4.85%. This, in turn, lifts the upside of the yellow metal.
The US economy showed an improvement in the third quarter (Q3). The preliminary US Gross Domestic Product (GDP) Annualized for Q3 expanded by 4.9% versus 2.1% prior, better than the estimation of 4.2%, according to the US Bureau of Economic Analysis on Thursday. Furthermore, the Initial Jobless Claims rose to 210,000 for the week ending October 21 from the previous reading of 200,000 (revised from 198,000), below the market expectation of 208,000. Continuing claims rose by 63,000, the highest reading since May.
The markets anticipate the Federal Open Market Committee (FOMC) will keep rates on hold and maintain a tightening bias at its meeting next week. On Thursday, US Treasury Secretary Janet Yellen stated that the US economy is operating well, although Americans are worried about the economy. Yellen mentioned that the recent rise in yields is unrelated to deficits and does not portend an oncoming recession. On the contrary, it reflects the strength of the US economy. Apart from this, escalating geopolitical tensions in the Middle East may boost safe-haven assets such as gold.
Across the pond, the European Central Bank (ECB) left key policy rates unchanged on Thursday. The ECB suggested that the focus of the policy is shifting to how long rates would remain at current levels, and they did not address adjusting their QE (PEPP) reinvestment profile.
Looking ahead, market players will closely monitor the US core Personal Consumption Expenditures Price Index (PCE) due later on Friday. Also, the US Consumer Inflation Expectation and Michigan Consumer Sentiment Index for October will be released. Next week, the Federal Open Market Committee (FOMC) meeting will be in the spotlight. Traders will take cues from the data and find trading opportunities around the gold price.
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