The price of gold (XAU/USD) held above $2,000 during early Asian trading hours on Monday. The yellow metal rally is fueled by expectations that the US Federal Reserve (Fed) will not raise interest rates further—the gold price trades near $2,001 at press time, losing 0.04% daily.
XAUUSD 4-hour chart
Meanwhile, the US Dollar Index (DXY), which measures the value of the USD against a basket of six world currencies, declined to 103.40, its lowest level since September. That said, a weaker USD boosts USD-denominated gold.
The private sector in the US continued to grow at a slower pace in early November. The S&P Global Composite PMI remained unchanged at 50.7. During the same period, the Manufacturing PMI fell to 49.4 from 50.0, worse than the expected 49.8. The Services PMI improved modestly to 50.8 from the previous reading of 50.6, above the consensus of 50.4.
The market believes that the Fed will adopt a less hawkish stance and is betting it will cut interest rates in the middle of next year, weakening the US dollar.
Later this week, gold traders will watch Wednesday’s US gross domestic product (GDP) and personal consumption expenditure (PCE) inflation figures. The annualised US quarterly GDP is expected to expand from 4.9% to 5.0%. US PCE for October is estimated to drop from 0.4% to 0.1%.
