The gold (XAU) price dropped by 0.43% on Wednesday after higher-than-expected Michigan Consumer Sentiment Index figures.
Possible effects for traders
A technical rise of the U.S. Dollar Index (DXY) and the proximity of a 2,000 resistance level prompted some traders to close their long positions in XAUUSD. However, expectations that the U.S. Federal Reserve (Fed) won’t be raising interest rates soon limited XAUUSD drop. Moreover, the market is currently pricing in a 57% chance of a rate cut in May 2024. ‘The increase in the market expectations for the Fed cutting cycle to commence earlier in 2024 has been the prime force driving gold prices higher over the last week,’ said Daniel Ghali, a commodity strategist at TD Securities.
XAUUSD was rising during the Asian and early European trading sessions. The U.S. market will be closed today and early on Friday due to Thanksgiving. Thus, volatility will be subsided, but the lack of liquidity may result in sharp moves of the instruments in case of unexpected events or data. ‘Spot gold may revisit its 21 November high of $2,007.29 per ounce, as it may have completed a correction from this level,’ said Reuters analyst Wang Tao.
