Gold price holds steady below multi-month peak as traders await US PCE Price Index

• Gold price struggles to gain any meaningful traction ahead of the US PCE Price Index.
• Fed rate cut bets, sliding US bond yields and a bearish USD continue to lend support.
• Concerns about the worsening economic conditions in China further act as a tailwind.

Gold price (XAU/USD) is seen oscillating in a narrow trading band during the Asian session on Thursday and consolidating its recent strong gains to its highest level since May 5, around the $2,052 area touched the previous day. Traders opt to move to the sidelines and await the release of the Personal Consumption Expenditures (PCE) data from the United States (USD), due later during the North American session. The core gauge – the Fed's preferred measure of inflation – will be looked for confirmation that inflation is slowing and reaffirm expectation of a dovish pivot by the Federal Reserve (Fed).

Heading into the key data risk, growing acceptance that interest rates in the US have peaked and rising bets that the Fed will start easing its monetary policy by the first half of the year continues to lend support to the non-yielding Gold price. The CME group's FedWatch tool indicates a more than 70% chance of a Fed rate cut move in May 2024, which leads to a further decline in the US Treasury bond yields. This, in turn, fails to assist the US Dollar (USD) to build on the overnight bounce from its lowest level since August 11, which, along with China's economic woes, acts as a tailwind for the XAU/USD.

Daily Digest Market Movers: Gold price holds steady just below a multi-month top amid dovish Fed expectations

• The recent remarks from several Federal Reserve officials suggested that the central bank may be done raising interest rates and continue to act as a tailwind for the Gold price.
• Fed Governor Christopher Waller flagged a possible rate cut in the months ahead and Cleveland Fed President Loretta Mester saw clear progress in getting inflation to 2%.
• The markets are now pricing in a cumulative 100 bps of rate cuts by the Fed in 2024, which is reinforced by a further decline in the US Treasury bond yields.
• The yield on the benchmark 10-year US government bond, which breached 5% in October for the first time in 16 years, languishes near its lowest level since September 14.
• Furthermore, the yield on the rate-sensitive two-year US Treasury note is at its lowest since July and continues to undermine the US Dollar, lending support to the XAU/USD.
• The second estimate of the US GDP showed that the world's largest economy grew by a 5.2% annualized pace during the third quarter as compared to the 4.9% reported previously.
• The upbeat US macro data did provide a modest lift to the USD on Wednesday, though dovish Fed expectations keep a lid on any meaningful recovery from a multi-month low.
• The latest data published by the National Bureau of Statistics (NBS) showed that China’s Manufacturing PMI ticked down to 49.4 in November from 49.5 in the prior month.
• The non-manufacturing PMI dropped to 50.2 in November from the 50.6 previous, fueling concerns about the worsening conditions in the world's second-largest economy.

Technical Analysis: Gold price consolidates before the next leg up amid slightly overbought RSI on the daily chart

From a technical perspective, the Relative Strength Index (RSI) on the daily chart is holding above the 70 mark, pointing to slightly overbought conditions and holding back bulls from placing fresh bets. That said, any meaningful corrective slide is more likely to attract fresh buyers near the overnight swing low, around the $2,035 region. This is followed by support near the $2,020 area and the $2,010-$2,008 strong horizontal resistance breakpoint.

The latter should act as a strong base for the Gold price, which if broken decisively should pave the way for deeper losses. On the flip side, the multi-month peak, around the $2,052 area touched on Wednesday, now seems to act as an immediate hurdle for the Gold price. A sustained strength beyond should allow bulls to aim back towards challenging the all-time high, around the $2,079-2,080 zone set in May.