“Gold eases for the 2nd day in a row but remains technically overbought”.

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Thoughts for The Day: Gold was steady in Asia on Thursday, posting a high for the day of $2047 but came under pressure in Europe with the price easing to $2037.85 at the AM benchmark in London, suggesting selling from either Central Banks or producers, or perhaps more likely a combination of both. This was followed by a bounce to $2045 shortly after the New York opening, following benign inflation data, but the recovery was short-lived with the price falling to a low for the day of $2032 amid moderate trading volume as the USD rallied and US10YT yields posted modest gains. The yellow metal ended down 0.39% at $2036 and has traded actively between $2034 and $2043 so far today, setting the scene for a volatile final session of the week. Silver bucked the bearish trend in the precious metals sector, gaining 1% to end near the highs at $25.27, while platinum fell 0.64% to $929 and palladium added another 2.22% to the previous day’s sharp sell-off, ending at $1011.

Market Commentary: December 1, 2023, (source Reuters)

• Gold prices looked set to mark a third straight weekly rise on Friday, after data showing cooling inflation cemented bets for a rate cut in the U.S., with traders now looking forward to comments from Federal Reserve’s Chair Powell later in the day. Spot gold rose 0.2% at $2,039.63 per ounce by 0301 GMT, after marking an over $60 rise in November – its second straight monthly rise. S. gold futures for February delivery rose 0.1% to $2,059.30.
• Data on Thursday showed U.S. consumer spending rose moderately in October, the annual increase in inflation was the smallest in more than 2-1/2 years.
• The dollar index DXY fell by 0.2%, after clocking its weakest monthly performance in a year in November, despite a 0.6% jump overnight. A weaker dollar makes gold less expensive for other currency holders.
• Yields on 10-year Treasury notes also ticked lower. Meanwhile, more Americans applied for unemployment benefits last week and the number on jobless rolls surged to a two-year high in mid-November, pointing to a gradually easing labour market. Cooling inflationary pressures, and an easing labour market make case for an end to the Federal Reserve’s interest rate hiking campaign and a possibility of rate cuts in the months ahead, a rhetoric that two Fed officials also flagged this week.
• Traders have advanced their bets for a rate cut by the U.S. central bank from about an 80% chance in May to a one-in-two chance in March, CME’s FedWatch Tool shows. Lower interest rates reduce the opportunity cost of holding non-interest-bearing bullion.
• Negotiators worked feverishly to renew the pause in fighting between Israel and Hamas in Gaza as a senior Israeli official reiterated plans to resume the war unless the Palestinian militant group agreed to release more hostages.
• Spot silver was steady at $25.24 per ounce. Platinum was down 0.3% to $924.17. Palladium rose 0.6% to $1,013.84 per ounce.

Economic Analysis (Trading Economics):

The personal consumption expenditure price index in the US was flat month-over-month in October 2023, the weakest reading since July 2022, after a 0.4% rise in both September and August, and compared to forecasts of 0.1%. A 0.3% decline in the prices of goods offset a 0.2% rise in the cost of services. Also, the annual rate cooled to 3%, the lowest since March 2021, from 3.4% in September and matching forecasts. Meanwhile, monthly core PCE inflation which excludes food and energy and is the preferred Fed measure of inflation, eased to 0.2% from 0.3%. Separately, the energy index declined by 2.6% month over month, while the food measure was up by 0.2%. Finally, the annual core inflation rate slowed to 3.5% from 3.7%, a fresh low since mid-2021. source: U.S. Bureau of Economic Analysis

Gold Chart

Silver Chart

Platinum Chart

Palladium Chart

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