Gold Price Forecast: XAU/USD extends its rally near $2,050 ahead of Chinese PMI data
China’s National Bureau of Statistics (NBS) Purchasing Managers Index (PMI) data and the US Core Personal Consumption Expenditure Price Index (PCE) are set to be crucial factors influencing the gold market in the coming days.
Continuing its upward trajectory, the gold price (XAU/USD) remains in positive territory for the sixth consecutive day during the early Asian session on Thursday. Despite a modest recovery in the US Dollar (USD), the precious metal shows resilience and is currently trading near $2,045, marking a 0.04% increase.
The US Dollar Index (DXY), which measures the value of the USD against a weighted basket of currencies used by US trade partners, has seen a slight recovery from its monthly lows, reaching 102.85. Meanwhile, Treasury yields have edged lower, with the 10-year yield standing at 4.259%.
On Wednesday, Cleveland Federal Reserve (Fed) President Loretta Mester addressed the issue of monetary policy, stating that the current stance is suitable for assessing economic conditions. She did not rule out the possibility of future rate hikes, emphasizing that their necessity is contingent upon the state of the economy.
In terms of recent data, the US Gross Domestic Product Annualized figure for the third quarter (Q3) showed a growth rate of 5.2%, surpassing the 4.9% recorded in the previous period and exceeding market expectations of 5.0%. This positive trend in economic growth has contributed to a shift in market sentiment, with expectations of a rate cut in May 2024 and the abandonment of the previously prevalent higher-for-longer rate narrative.
Looking ahead, investors are eagerly awaiting China’s NBS PMI data, which is expected to have a significant impact on gold prices. China, being both the largest producer and consumer of gold globally, holds considerable influence over the precious metal’s market dynamics. Of particular interest are estimates showing potential growth in Chinese Manufacturing to 49.7, along with anticipated improvements in Services PMI figures to 51.1.
Meanwhile, on the US economic calendar, Thursday will bring key releases such as the weekly Jobless Claims, the Core Personal Consumption Expenditure Price Index (PCE) for October, the Chicago PMI, and Pending Home Sales. These data points will offer further insights into the state of the world’s largest economy and could consequently influence the outlook for gold.
As investors analyze these indicators, market participants will notably keep an eye on the Chinese PMI figures, as they have the potential to shape gold’s trajectory. A stronger-than-expected performance in China’s economic indicators could provide an additional boost to the upward momentum of the yellow metal.
In summary, with the gold price continuing to rally and remaining resilient in the face of the US Dollar’s recovery, market participants will closely monitor the upcoming data releases from both China and the United States. The outcomes of these reports will play a decisive role in determining the future direction of gold prices, particularly in light of China’s status as a dominant player in the global gold market.
