In a riveting turn of financial events on December 21, Gold, that elusive metallic treasure, saw a surge in its value. The intricate dance of economic forces unfolded as the mighty dollar gracefully stepped back, responding to the symphony of U.S. economic data. This performance fueled anticipation, painting a vivid picture of the Federal Reserve contemplating a delicate dance with interest rates come March of the upcoming year.
Picture this: Spot gold, symbolized as XAU=, displayed a spirited climb of 0.7%, gracefully reaching $2,043.79 per ounce by 2:55 p.m. ET (1955 GMT). This marked a potential climax, eyeing its best session in six. Complementing this, U.S. gold futures, affectionately represented as GCcv1, settled in a crescendo, 0.2% higher at the harmonious note of $2,051.30.
The narrative of the U.S. economic saga unfolded further with data revealing a twist. The gross domestic product (GDP) waltzed onto the stage, showcasing a 4.9% annualized rate last quarter. However, the plot thickened as this was a revision, a subtle adjustment from the previously reported 5.2% pace. Meanwhile, in a subplot, weekly jobless claims took a measured step forward.
Enter Tai Wong, a virtuoso in the world of metals trading, hailing from the vibrant city of New York. With a flick of insight, Wong expressed, “GDP data came in a bit soft, and gold charged up. Market is craving the burgeoning Fed pivot.” The stage was set for a dynamic play, and the market eagerly anticipated the unfolding drama.
As the spotlight shifted, the market’s pulse quickened. The CME FedWatch tool, akin to an oracle, whispered that there now existed an 83% chance of a Fed rate cut by March. A subtle but significant rise from the 79% probability pre-data revelation. The allure of lower interest rates cast its spell, decreasing the opportunity cost of holding the non-yielding bullion.
The dollar, a key performer in this financial ballet, gracefully descended by 0.5%, while 10-year Treasury yields, represented as US10YT=RR, lingered near the enchanting low of a five-month symphony. The Fed’s dovish stance orchestrated a rhythm, causing markets to sway to the anticipation of several rate cuts in the upcoming dance of 2024. Yet, amidst this financial waltz, dissenting voices from some Fed officials echoed, cautioning against the immediacy of rate cuts.
As the audience held its breath, the plot thickened. The spotlight shifted to the upcoming U.S. core personal consumption expenditure (PCE) report, scheduled for a Friday unveiling. David Meger, a director of metals trading at High Ridge Futures, confidently proclaimed, “Gold will continue to maintain price levels above $2,000, and these expectations we have of lowering inflationary pressures will continue to foster the sideways to higher movement in gold.”
In the midst of this financial ballad, Silver, another precious character, took center stage, gaining 0.9% to a melodious $24.33 per ounce, hitting a 16-day high. Platinum, the unsung hero, rose 0.4% to $962.82, nearing a 16-week peak from the previous session. Meanwhile, Palladium, a rising star, surged 1.3% to $1,211.71, adding an unexpected twist to the unfolding narrative.
And so, the financial opera continued, with Gold leading the orchestra, each note resonating with the complexities and variations inherent in the intricate world of economic storytelling.