Market update: gold price – lining up for a year-end rally if US inflation cooperates?

The technical outlook for gold is looking increasingly positive as we near the last major data event of 2023, the Fed’s preferred measure of inflation, Core PCE.

This Friday’s release is expected to show the November Core PCE Price Index (y/y) slip to 3.3% from 3.5% in October, while the PCE Price Index (y/y) is expected at 2.8% from a prior month’s 3.0%. If these market forecasts are correct, the Fed will have a tougher job trying to convince financial markets that US rates need to stay at their current level for much longer.

Gold technical analysis

Gold is currently changing hands around $2,036/oz. in what looks to be limited trade. The 20-day simple moving average is providing near-term support, and the precious metal is probing an old level of resistance at $2,043/oz. and two recent highs on either side of $2,048/oz.

A break higher opens the way to $2,070/oz. and then $2,081/oz. To push higher, gold is going to need a strong driver – maybe Friday’s PCE release – otherwise the precious metal will likely trade sideways going into the festive break. A break below the 20-dsma ($2,023/oz.) would leave $2,009/oz. vulnerable.

Gold daily price chart

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