Gold Settles Above 2,000 Due to the US Dollar's Weakness
The gold (XAU) price rose by 0.5% on Friday and finished the day above the important 2,000 mark for the first time since 27 October.
Friday's trading session was relatively quiet, and the market closed early due to the Thanksgiving holiday. Gold continued to rise as the US Dollar Index (DXY) weakened on expectations that the Federal Reserve (Fed) may be preparing to adopt a dovish monetary policy. Still, the economic data from the U.S. shows a mixed picture. Low consumer spending numbers indicate that the rate increases by the Fed are beginning to affect the economy. However, Friday's Purchasing Managers Indices (PMIs) were rather strong. Therefore, gold's next move is unclear.
'We don't see either a significant move higher or lower in the short run into next year, and it becomes more certain that the U.S. central bank is willing to cut interest rates and probably cut interest rates significantly before we reach the 2% inflation target,' said Bart Melek, the head of commodity strategies at T.D. Securities.
Easing tensions in the Middle East hasn't put a bearish pressure on gold so far. XAU/USD rose strongly during the Asian trading session but failed to consolidate above the 2,018 level and started to decline during the early European session. Today, the economic calendar is uneventful, and only the U.S. New Home Sales data release at 3:00 p.m. UTC may trigger some volatility.
'Spot gold may extend gains into a range of $2,026 to $2,032 per ounce, as it has pierced above a resistance at $1,999,' said Reuters analyst Wang Tao.
The Australian Dollar is Moving Within an Uptrend
The Australian dollar (AUD) gained 0.38% on Friday as the U.S. dropped on expectations that the U.S. interest rates may have peaked.
It's incredibly quiet, as you'd expect on the day after Thanksgiving, with liquidity still pretty thin and volumes again on the light side,' said Michael Brown, the market analyst at Trader X in London. Generally speaking, the market thinks the U.S. economy has reached a cyclical downturn, and more rate increases are unwarranted.
AUD/USD has been trading in a bullish trend since 27 October, but future gains depend on inflation data and the monetary policy stance of the Reserve Bank of Australia (RBA). Shane Oliver, the chief economist at AMP, expects the Australian dollar to rise next year, citing reasons such as the currency being undervalued, favorable interest rate difference, rebounding commodity prices, and Australia's solid current account surplus.
AUD/USD was rising during the Asian and early European session. Today's trading session is expected to be relatively quiet, as there are no major economic reports. However, Wednesday's Australian monthly inflation report will be important to watch. In addition, tomorrow's speech by the RBA governor Michele Bullock at 1:20 a.m. UTC may give clues on the future interest rate path.