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Is Gold Poised for a Breakout? XAU/USD Holds Steady Below $2,040 Amid Fed Speculation
The Tether USDTprecious metal continues its bullish momentum in early Asian trading sessions, with XAU/USD hovering around the $2,035 level. This marks the third consecutive day of gains as the US dollar shows persistent weakness across currency markets. The dollar index (DXY) has retreated below the psychologically significant 102.00 threshold, while Treasury yields continue their downward trajectory with the benchmark 10-year note slipping to 3.92%.
Market sentiment remains influenced by the Federal Reserve's recent policy pivot, with the central bank signaling potential rate cuts in 2024. The FOMC's updated projections indicate three possible rate reductions next year, though this remains more conservative than market expectations. This dovish tilt has created favorable conditions for non-yielding assets like gold, while simultaneously pressuring the dollar's valuation.
Recent economic data presents mixed signals for monetary policy outlook. November's retail sales figures surprised to the upside with 0.3% growth, rebounding from October's 0.2% contraction. While this suggests continued consumer resilience, the dollar failed to capitalize on the positive data, allowing gold to maintain its upward momentum.
Attention now turns to upcoming economic releases that could influence precious metal pricing. Chinese industrial production and retail sales data for November will provide fresh insights into the world's second-largest economy. The World Bank's recent projections suggest Chinese growth may moderate to 4.5% in 2024 from this year's 5.2% pace, highlighting potential challenges for commodity demand.
Later in the trading session, US economic indicators including the S&P Global PMI readings and industrial production data will offer additional clues about economic momentum. Market participants will scrutinize these releases for implications on Fed policy and dollar direction, which remain key drivers for gold's near-term trajectory.
The technical setup for XAU/USD shows the metal consolidating recent gains while maintaining its bullish structure. With the dollar remaining on the defensive and Treasury yields subdued, the environment continues to favor gold bulls. However, traders should remain alert to potential volatility around upcoming data releases that could test the metal's current resilience.
