Gold tries to advance, benefiting from weak data and low activity in the futures market
December 24, 2024 (Investorideas.com Newswire) Investorideas.com (www.investorideas.com), a go-to platform for big investing ideas releases market commentary from Hasn, Senior Market Analyst at XS.com
Spot gold prices are trying to advance slightly today, rising by 0.12% and consolidating near the $2615 per ounce level, while we see stability in the continuous futures contracts on the Chicago Mercantile Exchange, which are located near the $2629 per ounce level.
Gold's gains come amid a noticeable decline in trading volumes for futures contracts in the US market and a day after a series of negative economic data flows. However, the continued pessimism about the pace of interest rate cuts next year prevented the yellow metal from benefiting from yesterday's data.
Yesterday, the probability of the Federal Reserve cutting rates in January reached a very low level near 6%, according to the CME FedWatch Tool, which contributed to re-feeding the gains of the dollar and bond yields, which pressured gold.
As for today, with the weak activity in the futures market and institutional investors amid the holiday season. Gold appears to be trying to take advantage of the waning activity of major institutional short sellers in the futures market to reclaim some of its gains. According to the Chicago Mercantile Exchange, yesterday's gold futures volume was around 111,400 contracts, which is a third of what it was at the peak of this month at 307,000.
Historically, since 2016, the last week of the year for gold has been a winning week, which may also justify the price rally despite the negative factors surrounding it.
As for the data, yesterday's consumer confidence, new home sales and core durable goods orders were below expectations. This type of data is one of those that help gauge sentiment, and when it is worse than expected, it may indicate weaker sentiment than before.
While the return of the stream of weak data may threaten optimism about the economy adjusting to high rates and accelerating inflation. This optimism was prevailing in light of the better-than-expected data that we have seen in recent weeks, despite the weak hope about the pace of rate cuts next year.
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