On Thursday (November 28th) morning trading in the Asian market, spot gold fluctuated narrowly and is currently trading around $2636.88 per ounce. Gold prices rose slightly on Wednesday, rebounding from a low hit in over a week on the previous trading day. Due to the weakening of the US dollar, gold prices reached a high of around $2658 in intraday trading on Wednesday. However, after data showed stagnant inflation progress, suggesting that the Federal Reserve may be cautious about further interest rate cuts, gold prices narrowed their gains and closed at $2635.80 per ounce.

The US market will be closed on Thursday due to the Thanksgiving holiday, and based on the experience of the past few years, the gold price tends to fluctuate narrowly this trading day.

Consumer spending in the United States grew steadily in October, but progress in reducing inflation over the past few months seems to have stalled.

Phillip Streible, Chief Market Strategist at Blue Line Futures, said, "We believe that the slight correction in gold prices that we just saw against the data is mainly driven by an increase in personal income. If consumers are stronger, even in the face of higher inflation, they may show resilience behind it, and the Federal Reserve may be less willing to aggressively continue cutting interest rates

The US dollar index fell 0.8% on Wednesday, hitting a two-week low, increasing the attractiveness of gold to holders of other currencies.

Streible stated that gold could reach $3000 in the first two quarters of 2025, unless a sharp rise in inflation forces the Federal Reserve to raise interest rates, which could hit the bull market.

At present, the market believes that there is a 70% chance that the Federal Reserve will cut interest rates by 25 basis points in December. In a low interest rate environment, non yielding gold is often favored.

Prior to the release of personal consumption expenditure (PCE) price index data, gold prices rose by 1%. On Monday, gold prices fell sharply by $100, marking the largest daily drop in over five months, as demand for safe haven weakened after Israel and Iran backed Hezbollah announced a long negotiated ceasefire agreement. The gold price hit its lowest level since November 18th in early Tuesday trading.

The rebound correction demand after the sharp decline has also provided some upward momentum for gold prices. However, due to multiple resistance pressures such as the 21 day moving average and 55 day moving average, the gold price still faces further downside risks. However, the decline in US dollar and US Treasury yields may attract bargain hunters to support gold prices.

There is relatively little economic data on this trading day, please pay attention to geopolitical situation related news and Trump related dynamic news.

Daily chart of spot gold

Consumer spending in the United States grew strongly in October, but progress in reducing inflation seems to remain stagnant

The slightly higher than expected increase in consumer spending in the United States in October suggests that the economy maintained most of its strong growth momentum in the early fourth quarter, but progress in reducing inflation in recent months seems to have stalled.

The failure to successfully push inflation back to the 2% target, coupled with the possibility of the incoming Trump administration imposing higher tariffs on imported goods, may lead to a reduction in the Federal Reserve's room for interest rate cuts next year.

The market still expects the Federal Reserve to cut interest rates for the third time in December, and other data released on Wednesday showed that more unemployed people fell into long-term unemployment in mid November.

David Russell, Global Head of Market Strategy at TradeStation, said, "December is still possible, but the possibility of further interest rate cuts in 2025 is decreasing

The Bureau of Economic Analysis of the US Department of Commerce announced that consumer spending, which accounts for more than two-thirds of US economic activity, increased by 0.4% in October. The surveyed economists had previously predicted a growth of 0.3%, and the growth rate in September was revised up to 0.6%, up from the previous value of 0.5%.

After adjusting for inflation, consumer spending increased slightly by 0.1%. Expenditure is largely driven by strong demand in the service industry. Service industry expenditure increased by 0.5%. The expenditure on goods remains unchanged.

The low unemployment rate largely supports consumption, and the strong household balance sheets brought about by the stock market surge and high housing prices also have a boosting effect.

Family savings are still high. The savings rate increased from 4.1% in September to 4.4%. Benefiting from a 0.5% increase in salary and a 0.6% increase in household disposable income. After deducting inflation and tax factors, household disposable income increased by 0.4% in October, following a slight increase of 0.1% in September.

Economists predict that this year's holiday shopping season will be quite good, despite high prices squeezing budgets. Adobe's data shows that in the first 24 days of November, consumers spent money online? 77.4 billion US dollars?,? More? Year on year growth of 9.6%.

Although inflation is still cooling down, the cooling trend has slowed down. The personal consumption expenditure (PCE) price index increased by 0.2% month on month in October, and the increase in September was also confirmed to be 0.2%. The PCE price index increased by 2.3% year-on-year in October, compared to a 2.1% increase in September.

After excluding the volatile food and energy sectors, the core PCE price index increased by 0.3% month on month, unchanged from the September increase.

The core PCE price index increased by 2.8% year-on-year in October, and climbed by 2.7% in September. This is the inflation indicator favored by the Federal Reserve when formulating monetary policy.

Some people are concerned that if Trump fulfills some of his campaign promises, inflation may rise next year. Trump announced on Monday that he will impose a 25% tariff on all products from Mexico and Canada on his first day in office, and an additional 10% tariff on goods from China.

Goldman Sachs economists estimate that if tariffs are implemented, the core PCE price index will increase by 0.9%.

However, there are increasing signs of idleness in the job market, which may outweigh concerns about rising inflation data.

A report released by the Ministry of Labor shows that as of the week ending November 23, the number of initial jobless claims decreased by 2000, to 213000 after seasonal adjustment, the lowest level since April. Economists previously predicted that the number of applicants would be 216000.

The report also shows that in the week ending November 16, the number of people who renewed their unemployment benefits increased by 9000, to 1.907 million after seasonal adjustment, the highest level since November 2021. This is an indicator to measure the recruitment situation.

The above data on the number of people applying for unemployment benefits is within the survey period conducted by the government on households regarding the November unemployment rate. During the survey period from October to November, the number of people applying for unemployment benefits increased, indicating that many laid-off workers found it difficult to find new jobs.

The unemployment rate has remained stable at 4.1% for two consecutive months. The November employment report will be crucial for the Federal Reserve's interest rate decision next month.

Another report shows that enterprise equipment spending started the quarter weakly. The US Bureau of Statistics announced that non defense capital goods orders, excluding aircraft, decreased by 0.2% in October and increased by 0.3% in September. This indicator, which measures a company's expenditure plan, has attracted much attention.

The US dollar has fallen, with lackluster economic data and market profit taking ahead of the long weekend

The US dollar fell widely in light pre holiday trading on Wednesday, as the market digested a series of data highlighting the resilience of the US economy, while investors assessed the risk of President elect Trump launching a no win tariff war.

Wednesday's decline further gave up the recent gains of the US dollar. Few traders are interested in establishing or holding positions before the long weekend of Thanksgiving. The US market will be closed on Thursday, and the exchange will close early on Friday.

We all expected inflation to rebound, but it hasn't gotten out of control. That's the key, "said Peter Cardillo, chief market economist at Spartan Capital Securities in New York." This paves the way for a 25 basis point rate cut in December, followed by a possible pause. But the reason for the pause may not be inflation data, but the uncertainty of Trump's tariffs. I think the Federal Reserve will become increasingly cautious

Wednesday's trend may be more due to some profit taking, at least for the United States before the long weekend, "said Amo Sahota, executive director of Klarity FX in San Francisco. As I said, the US dollar has had a very amazing performance before, and it is still very strong

Trump vowed on Monday to impose huge tariffs on Canada, Mexico, and China, the three largest trading partners of the United States, causing their currencies to depreciate and making investors uneasy.

Some analysts believe that the inflation risks brought by tariffs and proposed tax cuts may prevent Trump from taking more destructive measures.

Recently, the significant appreciation of the US dollar has greatly reduced the value of US dollar assets outside the United States, thereby increasing the rebalancing demand for selling US dollars at the end of the month, "said Sheryl Dong, foreign exchange strategist at Barclays Bank

According to an agreement aimed at ending hostilities along the Israel Lebanon border, a ceasefire between Israel and Iran backed Hezbollah came into effect on Wednesday. The war between the Middle East and Ukraine, although not the main factor affecting the foreign exchange market on Wednesday, has always supported the safe haven status of the US dollar, and the ceasefire agreement has also weakened the safe haven demand for the US dollar.

The US dollar index fell 0.77% on Wednesday, the largest daily decline in nearly three weeks, closing at 106.06. The intraday low reached 105.85, a new low in nearly two weeks.

Daily chart of the US dollar index

US Treasury yields fall as inflation takes a back seat in the face of economic growth concerns

The yield of US treasury bond bonds fell on Wednesday, which also provided some support for gold prices, because the opportunity cost of holding gold fell. The European consumer confidence survey is weak, and investors are flocking to US government bonds, while US inflation concerns have temporarily taken a back seat due to data meeting expectations.

Although the inflation rate remains high and above the Federal Reserve's 2% target, the bond market's response was lackluster before the Thanksgiving holiday on Thursday.

David Russell, Global Head of Market Strategy at TradeStation, said, "As investors shift towards the economic growth cycle, inflation is gradually subsiding

This week, concerns about a rebound in inflation resurfaced after US President elect Trump promised to impose punitive tariffs on imported goods from Canada, Mexico, and China.

In the past, it was the economy, then the elections... it's still the economy now, "said Jack McIntyre, Global Fixed Income Portfolio Manager at Brandywine Global. If you look at the economy... the Federal Reserve may cut interest rates, even if it's hawkish, "he said, referring to the Fed's next interest rate setting meeting in December.

Wednesday's data showed that German consumer confidence fell more than expected in November, while French consumer confidence fell to a five month low, and US Treasury yields, which are inversely proportional to price trends, subsequently declined.

According to data from the Chicago Mercantile Exchange on Wednesday, interest rate futures traders believe that there is a 70% chance that the Federal Reserve will cut interest rates by 25 basis points next month, higher than Tuesday's 59%.

The 10-year US Treasury yield closed at 4.234% on Wednesday, nearly 7 basis points lower than Tuesday and the lowest level since November 1st.

The two-year yield fell more than 4 basis points on Wednesday to 4.21%, the lowest level in over two weeks. In addition, the 30-year yield fell to 4.419% on Wednesday, the lowest level since November 7th.