Gold closes week above $2,700, US PCE data in focus
Gold prices rose to a fresh two-week high on Friday (11/22) during the North American session as US Treasury yields fell. Geopolitics continued to play its part, sustaining demand for the bullion metal, while US business activity improved, capping gains for the non-yielding metal. XAU/USD was trading at $2,710, up 1.50%.
The yellow metal surged on a slight decline in US Treasury yields. The US 10-year T-note fell two basis points to 4.40%, boosting bullion prices, which are set to post a gain of more than 5% this week.
The risk that the Russia-Ukraine war could escalate and turn into a US-Russia conflict is keeping bullion prices elevated. This and uncertainty about the Middle East conflict involving Israel and Lebanon could pave the way for a retest of XAU/USD’s all-time high of $2,790.
Independent Russian media outlet Mediazona, along with BBC Russian, confirmed that 79,819 Russian soldiers were killed in the war against Ukraine. The data was released as Russian President Vladimir Putin showcased a new medium-range ballistic missile, the Oreshnik, which is also nuclear-capable. Mediazona, quoted by the Kyiv Independent on Sunday (11/24/2024), reported that in the past two weeks, almost 2,700 Russian personnel had lost their lives.
The details of the total death toll include 17,000 volunteers, 14,500 recruits from prison, and 9,700 mobilized soldiers. However, journalists at both media outlets warned that the actual figure was likely much higher because their information came from public sources, such as obituaries, news from relatives, regional media reports, and local authority announcements. The report, released on November 22, 2024, also came out as more evidence of violence emerged in the Russian military ranks. Most recently, two commanders known by the call signs Bely (White) and Gvozd (Nail) were arrested for locking subordinates in dog cages. In addition, the death of pro-Kremlin American volunteer Russell Bentley in a military prison also attracted attention.
On the data front, the US economic docket features the release of the S&P Global Flash PMI for November. The Services and Composite indices rose, beating estimates and the October reading. However, the Manufacturing PMI, despite improving above estimates and the previous month’s release, remained below the 50-line that divides expansion/contraction territory.
Recently, the University of Michigan (UoM) revealed that Consumer Sentiment among Americans improved compared to the preliminary reading, while inflation is expected to approach the Federal Reserve’s (Fed) target of 2% in the next 12 months.
Meanwhile, some Fed officials who delivered the news were a little concerned about the stalled inflation progress. While the majority advocated looser policy, they acknowledged that the economy remains strong, and if inflation stays above the 2% target, they could pause their easing cycle.
Traders cut the odds for a rate cut by 25 bps at the December meeting. The CME FedWatch tool put the probability of a rate cut at 56%, down from a 58% chance two days ago.
Key economic indicators, including the Federal Reserve's meeting minutes, October Durable Goods Orders, and the Core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge, are due next week.
Source: FXStreet
