Gold price poised for movement ahead of US CPI and key central bank meetings

• Gold price is under pressure for the second day in a row on Monday.
• Reduced bets for a March Fed rate cut and a slight USD increase are affecting the metal.
• Geopolitical risks could help limit further losses ahead of this week’s key data/events.

Gold price (XAU/USD) saw a dramatic turnaround from an all-time peak last week and fell to a two-week low on Friday after stronger-than-expected US employment data was released. The US jobs report indicated a strong US labor market, leading investors to reduce their bets for a 25 bps interest rate cut by the Federal Reserve (Fed) in March 2024. This pushed US Treasury bond yields and the US Dollar (USD) higher, weighing heavily on the commodity.

With signs of stability in the equity markets, the safe-haven Gold price remains low for the second consecutive day on Monday. However, concerns about a global economic downturn, especially in China, and geopolitical risks provide some support to the precious metal and help limit deeper losses. Traders are also hesitant to place aggressive bets ahead of this week’s key data and central bank event risks. US consumer inflation figures are due on Tuesday, followed by the outcome of the crucial two-day FOMC meeting on Wednesday. 

Focus will remain on the “dot plot” that will provide cues about the Fed’s rate projections for the next year and impact the non-yielding Gold price. The Swiss National Bank (SNB), the Bank of England (BoE), and the European Central Bank (ECB) are also set to announce policy updates on Thursday. The release of flash PMI prints from the Eurozone, the UK, and the US will offer insight into the global economy and further influence the precious metal. 

Daily Digest Market Movers: Gold price remains depressed amid diminishing odds for an early Fed rate cut

• The benchmark 10-year US Treasury yield rebounded from a three-month low after the upbeat US jobs data, lifting the US Dollar and undermining the Gold price on Friday.
• The US NFP report showed that the economy added 199K new jobs in November, surpassing estimates for a reading of 180K and 150K rise in the previous month.
• The US Bureau of Labor Statistics (BLS) reported that the Unemployment Rate dipped to 3.7% from 3.9% in October, despite a rise in the Labor Force Participation Rate.
• The data pointed to the underlying labor market strength and made traders bet that it could take the Federal Reserve until May 2024 to deliver the first interest rate cut.
• The US troops were targeted with rockets and drones at least five more times on Friday by Iran-backed militias in Iraq and Syria over its support to Israel amid a war in Gaza.

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