Gold Price Forecast: XAU/USD consolidates its gains near $2,040, PBoC rate decision eyed

Gold price (XAU/USD) consolidates its gains around $2,040 during the early Asian trading hours on Wednesday. The yellow metal remains capped below the $2,050 barrier. However, the weaker US Dollar (USD) and lower US Treasury bond yields might lift the gold price ahead of the holiday.

The Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee said on Monday that the central bank is not precommitting to cutting interest rates soon, and the increase in market expectations that it would do so is inconsistent with how the Fed functions. Last week, New York Fed President John Williams stated that they aren’t really talking about rate cuts right now.

The US Census Bureau revealed on Tuesday that Building Permits declined to 1.46M from 1.498M, below the market consensus of 1.47M. Housing Starts for November rose to 1.56M from 1.359M, better than the market expectation of 1.36M. The upbeat November’s Housing Starts reflects strong buyer demand amid the falling mortgage rates.

China's economy is expected to see more favorable conditions and more opportunities than challenges in 2024 and macroeconomic policies will continue to bolster economic recovery. Additionally, the International Monetary Fund (IMF) revised upward its growth forecast for China to 5.4% this year, citing a strong recovery following the COVID-19 pandemic. It’s worth noting that the positive development surrounding China’s economy might lift the yellow metal as China is the world's largest gold consumer.

Furthermore, the People's Bank of China (PBoC) is widely expected to leave lending benchmark rates unchanged at a monthly fixing on Wednesday, according to a Reuters survey.

Gold traders will monitor the PBoC rate decision ahead of the US Existing Home Sales on Wednesday. Later this week, the US Gross Domestic Product Annualized for the third quarter (Q3) and the Core Personal Consumption Expenditures Price Index (PCE) will be released on Thursday and Friday, respectively. Traders will take cues from these events and find trading opportunities around the gold price.