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Gold prices are trading at a six-month high on Monday as USD weakness continues to underpin the safe-haven asset. With the market having significantly altered its Fed outlook over the coming months, the greenback has come under heavy selling pressure recently. The drop in US October labor market data and the fresh fall in CPI have seen traders pricing out any further Fed tightening in coming months, with pricing now reflecting expectations for a rate cut over H1 2024.
 

US Data & Fed Comments Due

Looking ahead this week, the main focus for gold traders will be the next slew of US data due. Revised Q3 GDP on Wednesday and core PCE on Thursday will be the key releases. Should we see any fresh downside in either reading, this should keep the Dollar pressured near-term, reinforcing expectations that the Fed will be looking to ease monetary policy in the first half of next year.

Against this backdrop, gold prices look likely to continue higher for now. Along with further US data, we also have a raft of Fed commentary set to roll out across the week. Given the proximity to the December FOMC, these comments will be closely watched and hold the power to further drive USD/Gold flows this week.
 

Technical Views

Gold

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The rally in gold prices has seen the market breaking back above the 1973.51 level, now testing the recent highs around 2010. If price can hold above that peak, the focus will be on a further push higher towards the 2069.41 level next. We are seeing some bearish divergence in momentum studies, however, suggesting the need for caution if we don’t hold above this peak. 

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