Gold rebounded above $4,210 per ounce on Thursday after an early dip as markets squared positions ahead of the FOMC and digested fresh US labour signals that accelerated expectations of imminent easing.
ADP reported a surprise decline of 32,000 private payrolls while Challenger announced 71,321 layoffs in November bringing the year to date total near 1.17 million which reinforced evidence that the labour market is cooling and lifted market confidence in a December 25bp cut.
The dollar weakened with the DXY near 98.8 at its lowest since late October which reduced the opportunity cost of holding bullion. Markets now price roughly an 87% chance of a cut next week. Attention is turning to the delayed September PCE release due Friday which should clarify the timing and pace of easing.
Apart from this, the cautious market mood and geopolitical uncertainties stemming from the protracted Russia-Ukraine war lend additional support ot the safe-haven Gold. The XAU/USD bulls, however, might refrain from placing aggressive bets and opt to wait for the release of the September Personal Consumption Expenditures (PCE) Price Index. The data would offer cues about the Fed's rate-cut path and provide a fresh impetus to the commodity.
Gold benefits from dovish Fed expectations, cautious market mood
Global outplacement firm Challenger, Gray & Christmas said that planned job cuts declined 53%, to 71,321 in November, from 153,074 in the previous month, which was the highest for an October month since 2003. Separately, the US Labour Department reported that Initial Jobless Claims fell to 191K in the week ended November 29, marking the lowest level in more than three years.
Source: Trading Economi
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