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The Fed's Interest Rate Projections Bring Gold to Strengthen
The Fed's Interest Rate Projections Bring Gold to Strengthen
Thursday, 28 December 2023

Price Performance Indicators

Product 

Price

% change

GOLDUD

2026.64

1.28%

GOLDGR

1032600

1.10%

XAUUSD

2028.1

1.44%

COMEX

2036

1.03%

USD/IDR

15516

-0.17%

Gold Focus:

1.    ICDX gold price strengthens 1.28% (18/12 - 22/12).

2.    Economic data influences gold prices

Market Review

ICDX gold prices strengthened at 1.28% compared to the previous week with the focus on weak American economic data making gold prices strengthen. In contrast to China's economic data which makes gold strengthen.

Economic data released showed a decline in building permits in the United States, reaching 1.46 million from 1.498 million, below the market consensus of 1.47 million. The US economic report reported an increase in initial jobless claims to 205,000, up 2,000 from the previous week.The Core Personal Consumption Expenditures (PCE) Index was weaker for November, which contributed to pressure on the US Dollar. US Core PCE (annual) inflation grew 3.2%, missing expectations of 3.3% and 3.4% previously. At the same time, the monthly data showed a consistent 0.1% versus market expectations of 0.2%.

In terms of US economic interest rates, this is reflected in the decline in the Philadelphia Fed Manufacturing Index to -10.5 from -5.9 in December. Speculation of easing by the Federal Reserve is increasing.This speculation stems from the Fed's policy pivot in December, where the dot plot of interest rate expectations showed the possibility of three rate cuts, with a total rate cut of 75 basis points by the end of 2024.

Market View

Catalyst From China On Future Gold Prices

As the largest gold consumer in the world, China also influences gold price fluctuations through increasing the growth projections of the International Monetary Fund (IMF).China's economic growth will rise to 5.4% from 4.6% in 2024, after a strong recovery after the COVID-19 pandemic, this has made gold prices strengthen, considering that China is one of the largest gold consumers in the world. On the other hand, numbersChina's annual Industrial Profit in January to November recorded a decline of 4.4%, indicating a slowdown and highlighting the need for additional policy support from Beijing to boost growth in the world's second-largest economy.

China takes center stage in 2024, characterized by stable inflation and low borrowing costs, especially with the prospect of economic stimulus from China.China aims to boost domestic demand to accelerate economic recovery and promote stable growth, according to an interim report on China's 14th five-year plan published by parliament on Wednesday. China will also accelerate reforms aimed at expanding the middle-income group in the country.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Date

Data / Events

Actual

Expectation

Previous

19 - December

USD - Building Permits (MoM)(Nov) 

1.46M

1.47M

1.498M

19 - December

USD - Housing Starts (MoM)(Nov)

1.56M

1.36M

1.359M

20 - December

CNY - PBoC Interest Rate Decision 

3.45%

3.45%

3.45%

20 - December

USD - Existing Home Sales Change (MoM)(Nov) 

0.8%

-4.1%

20 - December

USD - Consumer Confidence(Dec) 

-

-

-

20 - December

USD - Fed's Goolsbee speech 

-

-

-

21 - December

USD - Gross Domestic Product Price Index(Q3) 

3.3%

-

3.5%

21 - December

USD - Initial Jobless Claims(Dec 15) 

212k

-

213.5k

21 - December

USD - Philadelphia Fed Manufacturing Survey(Dec) 

10.5

-3

5.9

21 - December

USD -Gross Domestic Product Annualized(Q3) 

4.9%

5.2%

5.2%

22 - December

USD - Core Personal Consumption Expenditures - Price Index (MoM)(Nov) 

0.1%

0.2%

0.1%

Source: ICDX Research

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