Gold price consolidates near one-week top amid risk-on, ahead of BoE/ECB/US Retail Sales

Gold price attracts some follow-through buying for the second straight day on Thursday.
The US bond yields and the USD extend the post-FOMC slide, lending support to the metal.
The risk-on environment caps gains for the XAU/USD ahead of the central bank bonanza.

Gold price (XAU/USD) builds on the overnight solid recovery from the vicinity of the 50-day Simple Moving Average (SMA), around the $1,973 area, or over a three-week low and gains positive traction for the second successive day on Thursday. The previous metal sticks to modest intraday gains through the first half of the European session and seems poised to appreciate further in the wake of the Federal Reserve's (Fed) dovish shift.

In fact, the US central bank signalled on Wednesday that it is done raising interest rates and the so-called "dot plot" indicated three 25 basis points (bps) rate cuts in 2024. This leads to a further decline in the US Treasury bond yields and continues to undermine the US Dollar (USD), which should undermine the non-yielding Gold price. This, along with geopolitical risks and China's economic woes, validates the positive outlook for the XAU/USD.

Traders, however, opt to wait on the sidelines ahead of key central bank meetings later today amid the prevalent risk-on environment, which tends to undermine the safe-haven Gold price. The Bank of England (BoE) and the European Central Bank (ECB) are due to announce their policy decisions, which might infuse some volatility in the markets. Apart from this, the US monthly Retail Sales figures should provide some impetus to the precious metal.

Daily Digest Market Movers: Gold price remains supported by rising bets for Fed rate cuts in 2024

The Federal Reserve on Wednesday decided to keep interest rates at a 22-year high for the third meeting in a row and struck a more dovish tone in the accompanying policy statement.
Policymakers see inflation getting closer to the 2% annual target without a recession and the fed funds rate peaking at 4.6% in 2024, down from September's projection of 5.1%.
Data released on Wednesday showed that the rise in average prices that businesses pay to suppliers decelerated to 0.9% in November, down from a 1.2% annual increase in October.
The markets are now pricing in a nearly 60% chance that the Fed will begin to cut rates at its March meeting and the odds of a May rate cut stand at 90% versus 80% before the announcement.
The benchmark 10-year US government bond yield tumbles below 4%, to its lowest level since August and the yield on the rate-sensitive two-year Treasury note touches its weakest level since July.
The post-FOMC US Dollar selling lends additional support to the Gold price, albeit the risk-on environment keeps a lid on any further gains ahead of the central bank bonanza on Thursday.
The Swiss National Bank (SNB), the Bank of England (BoE) and the European Central Bank (ECB) will announce their policy decisions later today, which might infuse some volatility.
Traders on Thursday will further take cues from the US monthly Retail Sales data, which consensus estimates pointing to a fall for the second successive month, by 0.1% in November.

Technical Analysis: Gold price bulls need to wait for a move beyond $2,040 supply zone

From a technical perspective, some follow-through buying beyond the $2,040 area will be seen as a fresh trigger for bullish traders. With oscillators on the daily chart holding in the positive territory, the Gold price might then climb to the next relevant hurdle near the $2,072-2,073 region. The momentum could get extended further and allow the XAU/USD to reclaim the $2,100 round-figure mark.

On the flip side, the $2,012-2,010 horizontal zone might now protect the immediate downside ahead of the $2,000 psychological mark. A convincing break below the latter will make the Gold price vulnerable and expose the 50-day SMA support, currently pegged near the $1,973-1,972 region. This is followed by the 200-day SMA, near the $1,950 area, which if broken will shift the bias in favour of bearish traders.

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Pound Sterling.

	USD	EUR	GBP	CAD	AUD	JPY	NZD	CHF
USD		-0.25%	-0.22%	-0.34%	-0.84%	-0.97%	-0.83%	-0.44%
EUR	0.25%		0.03%	-0.08%	-0.60%	-0.72%	-0.59%	-0.19%
GBP	0.20%	-0.03%		-0.11%	-0.64%	-0.81%	-0.64%	-0.22%
CAD	0.35%	0.09%	0.12%		-0.52%	-0.64%	-0.52%	-0.11%
AUD	0.85%	0.60%	0.62%	0.51%		-0.13%	-0.01%	0.40%
JPY	0.82%	0.59%	0.63%	0.49%	0.00%		0.01%	0.39%
NZD	0.86%	0.58%	0.62%	0.50%	-0.03%	-0.14%		0.39%
CHF	0.40%	0.16%	0.22%	0.08%	-0.44%	-0.58%	-0.42%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Economic Indicator

United States Retail Sales (MoM)

The Retail Sales data, released by the US Census Bureau on a monthly basis, measures the value in total receipts of retail and food stores in the United States. Monthly percent changes reflect the rate of changes in such sales. A stratified random sampling method is used to select approximately 4,800 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms across the country. The data is adjusted for seasonal variations as well as holiday and trading-day differences, but not for price changes. Retail Sales data is widely followed as an indicator of consumer spending, which is a major driver of the US economy. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders

Retail Sales data published by the US Census Bureau is a leading indicator that gives important information about consumer spending, which has a significant impact on the GDP. Although strong sales figures are likely to boost the USD, external factors, such as weather conditions, could distort the data and paint a misleading picture. In addition to the headline data, changes in the Retail Sales Control Group could trigger a market reaction as it is used to prepare the estimates of Personal Consumption Expenditures for most goods.

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