The US PCE data brings good news. Gold rallied more than $20 and may touch $2,130 in the medium term

The US personal consumption expenditure price index (PCE) rose less than expected in November, suggesting that underlying price pressures are easing. This trend is likely to further solidify financial marekts' expectations that the Federal Reserve will cut interest rates in March next year.

The latest data showed that the core PCE price index in the United States rose at an annual rate of 3.2% in November, which was lower than the expected 3.3%. In addition, the core PCE price index rose at a monthly rate of 0.1%, which was also lower than the expected 0.2%. Meanwhile, personal spending rose at a monthly rate of 0.2%, which was lower than the expected 0.3%. The data suggest that the U.S. economy seemed to have experienced some difficulties at the beginning of the fourth quarter, but is now returning to a certain growth rate.

After the release of PCE data, the dollar index DXY rose more than 15 points in the short term, now at 101.73. The euro against the dollar EUR/USD fell nearly 30 points in the short term, now at 1.1007; the pound against the dollar GBP/USD fell more than 30 points in the short term, now at 1.2703; the dollar against the yen USD/JPY rose 50 points in the short term, now at 142.35.

Economists have already raised their forecasts for GDP growth this quarter to an annualised rate of up to 2.7 per cent. The upbeat numbers have reinforced expectations of a rate cut by the Federal Reserve, which is currently priced in March 2024.

After the data release, the price of spot gold expanded to 1.03%, now trading at $2066.91 an ounce. The reaction in the gold market shows that investors are looking for safe haven assets to deal with possible economic uncertainties.

Overall, the US PCE data for November further supported market expectations for the Federal Reserve to cut interest rates. However, investors need to note that the data may have a limited impact on financial assets, as interest rate cut expectations have been fully digested by the market. Safe-haven assets such as gold are likely to continue to be favoured by investors in the face of global economic uncertainty.

The main trend for gold remains optimistic, at least the first resistance level is $2070, and in the medium term, the price of gold is likely to reach $2130 again. With the dollar and Treasury yields lower, gold will perform very well.

Beijing time 22:28, spot gold rose 21.17 US dollars, or 1.04%, reported 2066.78, the US dollar index fell 0.25%, reported 101.4798/50; 10-year US Treasury yields fell 0.69%, reported 3.869%.