After the Federal Reserve's preferred core inflation indicator fell below expectations last week, gold prices remained stable on Monday (December 23) as traders weighed the outlook for monetary policy.

In light trading, gold approaches $2620. Previously, gold prices closed up 1.1% on Friday, driven by the release of the November Core Personal Consumption Expenditure (PCE) price index data. The data shows a flat performance, which is a step in the right direction for policy makers who hope to further cut interest rates in 2025.

Last Friday, the Bureau of Economic Analysis released data showing that the year-on-year growth of the PCE price index in November in the United States increased from 2.3% last month to 2.4%, the highest level since July, but lower than the expected 2.5%; The month on month growth was 0.1%, lower than the expected value of 0.2%.

After excluding volatile food and energy, the core PCE price index increased by 2.8% year-on-year in November, unchanged from the previous value and also lower than the expected 2.9%; The month on month growth was 0.1%, lower than the expected 0.2%, setting a record low since May. Federal Reserve officials generally believe that core PCE data is a better indicator for measuring long-term inflation trends.

Nick Timiraos, a Wall Street Journal reporter known as the "New Federal Reserve News Agency," said that both overall PCE and core PCE showed moderate performance in November. The data released on Friday, even after the FOMC meeting, will not constitute "news" for the Federal Reserve. If you know the Producer Price Index (PPI), Consumer Price Index (CPI), and import prices for a certain month, you can make fairly reliable predictions about Personal Consumption Expenditure (PCE).

Chris Larkin, Managing Director of Trading and Investment at E-Trade Morgan Stanley, said, "Stubborn inflation seems to have loosened. The Fed's preferred inflation indicator is lower than expected, which may alleviate some of the market's disappointment with the Fed's interest rate announcement

Lower interest rates are usually favorable for gold because gold itself does not pay interest.

This year, the price of gold has risen by about 27% and reached a historic high, thanks to the loose monetary policy of the United States, safe haven demand, and global central bank gold purchases. However, since Donald Trump was elected president, the rise in gold prices has slowed down due to the strengthening of the US dollar. The strengthening of the US dollar makes commodities priced in US dollars more expensive for most buyers.

On Monday, the US dollar index (measuring the exchange rate of the US dollar against six major currencies) remained stable at 107.78, close to the two-year high of 108.54 hit last Friday.

The US Congress passed spending legislation earlier on Saturday, avoiding a government shutdown and boosting investor sentiment. As the end of the year approaches, trading volume may decrease this week due to the impact of holidays.

Traders currently expect to cut interest rates by 44 basis points next year, slightly lower than the two 25 basis point rate cuts predicted by the Federal Reserve last week, after predicting four rate cuts in September. The market pricing has postponed the first interest rate cut in 2025 to June.

When optimism rises and market valuations expand, just a little fear can make the surface of the market rally fade, "said Brian Jacobsen, chief economist at Annex Wealth Management." This year has experienced a series of setbacks, and looking back, they were just bumps on the road. At that time, it felt like a life and death crisis. Perhaps the Fed's discussion of cutting interest rates twice instead of four times in 2025 is another such bump

In light trading, gold approaches $2620. Previously, gold prices closed up 1.1% on Friday, driven by the release of the November Core Personal Consumption Expenditure (PCE) price index data. The data shows a flat performance, which is a step in the right direction for policy makers who hope to further cut interest rates in 2025.

Last Friday, the Bureau of Economic Analysis released data showing that the year-on-year growth of the PCE price index in November in the United States increased from 2.3% last month to 2.4%, the highest level since July, but lower than the expected 2.5%; The month on month growth was 0.1%, lower than the expected value of 0.2%.

After excluding volatile food and energy, the core PCE price index increased by 2.8% year-on-year in November, unchanged from the previous value and also lower than the expected 2.9%; The month on month growth was 0.1%, lower than the expected 0.2%, setting a record low since May. Federal Reserve officials generally believe that core PCE data is a better indicator for measuring long-term inflation trends.

Nick Timiraos, a Wall Street Journal reporter known as the "New Federal Reserve News Agency," said that both overall PCE and core PCE showed moderate performance in November. The data released on Friday, even after the FOMC meeting, will not constitute "news" for the Federal Reserve. If you know the Producer Price Index (PPI), Consumer Price Index (CPI), and import prices for a certain month, you can make fairly reliable predictions about Personal Consumption Expenditure (PCE).

Chris Larkin, Managing Director of Trading and Investment at E-Trade Morgan Stanley, said, "Stubborn inflation seems to have loosened. The Fed's preferred inflation indicator is lower than expected, which may alleviate some of the market's disappointment with the Fed's interest rate announcement

Lower interest rates are usually favorable for gold because gold itself does not pay interest.

This year, the price of gold has risen by about 27% and reached a historic high, thanks to the loose monetary policy of the United States, safe haven demand, and global central bank gold purchases. However, since Donald Trump was elected president, the rise in gold prices has slowed down due to the strengthening of the US dollar. The strengthening of the US dollar makes commodities priced in US dollars more expensive for most buyers.

On Monday, the US dollar index (measuring the exchange rate of the US dollar against six major currencies) remained stable at 107.78, close to the two-year high of 108.54 hit last Friday.

The US Congress passed spending legislation earlier on Saturday, avoiding a government shutdown and boosting investor sentiment. As the end of the year approaches, trading volume may decrease this week due to the impact of holidays.

Traders currently expect to cut interest rates by 44 basis points next year, slightly lower than the two 25 basis point rate cuts predicted by the Federal Reserve last week, after predicting four rate cuts in September. The market pricing has postponed the first interest rate cut in 2025 to June.

When optimism rises and market valuations expand, just a little fear can make the surface of the market rally fade, "said Brian Jacobsen, chief economist at Annex Wealth Management." This year has experienced a series of setbacks, and looking back, they were just bumps on the road. At that time, it felt like a life and death crisis. Perhaps the Fed's discussion of cutting interest rates twice instead of four times in 2025 is another such bump