Gold price (XAU/USD) looks set to rally further after a significant decline in the United States core Personal Consumption Expenditure price index (PCE) in November has boosted hopes of early rate cuts by the Federal Reserve (Fed). Market participants are pricing in the first rate cut by the Fed in March, and second in May after two years of historically rapid rate-tightening by the central bank.
Fed policymakers, who were endorsing higher for longer interest rates to ensure a return of inflation to 2%, may support an early reduction in borrowing costs. The current cycle in which interest rates have undergone tightening for a longer period may impact the overall state of employment in the economy. Hopes of interest rate cuts have propelled home prices higher, which remained muted from February 2022 till June. Gold price hovers near a two-day high at around $2,066 in a thin-trading week. The precious metal is expected to remain sideways amid an absence of critical events ahead. More upside would appear if the Gold price manages to sustain above the crucial resistance at $2,070. Short-to-long term daily Exponential Moving Averages (EMAs) are sloping higher, pointing towards an upside bias. Momentum oscillators swing in a bullish trajectory, indicating a healthy trend to the upside.
