Gold steadied on expectations of rate cuts by the Federal Reserve in 2024

prices experienced a marginal decline of -0.1%, settling at 62415, primarily influenced by the prevailing expectations of rate cuts by the Federal Reserve in 2024. The prospect of a shift in the Fed’s stance, supported by recent bearish remarks from several Fed officials, is heightening the likelihood of early interest rate cuts in March. Fed Atlanta President Rafael Bostic’s statement, indicating the potential for two interest rate cuts in the second half of next year, has contributed to the market sentiment. 

Richmond Fed President Thomas Barkin emphasized that the Fed’s decision to cut interest rates will hinge on the performance of the U.S. economy. The heightened expectations for a U.S. interest rate cut in March surged to 81%, with a significant probability of such a cut at the May meeting reaching 98%. Additionally, the U.S. current account deficit, as reported by the Commerce Department’s Bureau of Economic Analysis, contracted by $16.5 billion, or 7.6%, to $200.3 billion in the third quarter. This reduction was attributed to increased petroleum exports, marking the smallest deficit since the second quarter of 2021. 

From a technical standpoint, the market is undergoing long liquidation, evidenced by a 1.65% drop in open interest to 14891. Gold is currently finding support at 62280, and a breach could test 62145, while resistance is likely at 62580, with a potential upward move targeting 62745.