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Setting Up For Fifth Consecutive Day Of Gains

GOLD

Gold is 0.5% higher in the Asia-Pac session, extending its four-day rally, after closing 0.5% higher at $2077.49 on Wednesday.

  • Bullion was supported yesterday by lower US Treasury yields as investors became increasingly confident that the Federal Reserve will loosen monetary policy aggressively in 2024.
  • The yield on the US Treasury 10-year dropped 11 bps to 3.79% - the lowest level since mid-July. The ball started rolling after the Richmond Fed Mfg Index (-11 vs. -3 est, -5 prior) and Business Conditions (0.0 vs. -9 prior) printed the lowest reading since April. A decent $58bn 5-year Treasury auction then allowed the rally to extend into the close.
  • Projected rate cuts for early 2024 also gained momentum, with March 2024 fully pricing in a 25 bp cut. A cumulative 54 bps of easing is priced for May 2024, with -167 bps by December 2024.
  • Later today the US calendar sees Weekly Claims, Retail/Wholesale Inventories and Home Sales. The US Treasury wraps up 2023's supply with a $40bn 7-year Note auction.
  • From a technical standpoint, yesterday’s increase cleared resistance at $2073.4 (61.8% retrace of the Dec 4-14 bear leg) to open $2097.1 (76.4% retrace of the same move), according to MNI’s technical team.
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