On a Wednesday marked by fluctuations in gold prices, the precious metal slightly recovered after hitting a weekly low during the previous trading sessionThe rebound was primarily attributed to a weakening dollar, which enhanced gold's appeal to investorsDuring intraday trading, gold prices peaked at approximately $2,658 per ounceHowever, as new inflation data suggested stagnation in progress, market expectations began to align with a cautious stance from the Federal Reserve regarding future rate cutsThis led to a narrowing of gold's gains, which ultimately closed at $2,635.80 per ounceWith the Thanksgiving holiday approaching in the United States, trading activity is likely to remain muted, characterized by patterns of narrow fluctuations around holiday periods.

On Thursday, November 28th, early trading in Asian markets saw spot gold oscillating within a tight range, settling around $2,636.88 per ounceThe slight uptick in gold prices on Wednesday was a direct response to the previous day's drop, where prices fell to their lowest level in over a week, fueled by the dollar's downward trajectoryAnalysts have pointed out, however, that the bullish momentum in gold prices was also complicated by market responses to the recent data releases, which revealed a stall in inflation progressPhillip Streible, Chief Market Strategist at Blue Line Futures, mentioned, “The recent modest pullback in gold prices was mainly driven by increased personal incomeIf consumers show strength, even amidst rising inflation, the resilience could deter the Fed from aggressively cutting rates.”

As the dollar index dipped by 0.8% to its lowest level in two weeks, the attractiveness of gold to holders of alternative currencies increased significantlyStreible further projected that gold prices could potentially reach $3,000 per ounce in the first half of 2025, unless surging inflation compels the Fed to raise interest rates, which could undermine the current bullish trend

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Presently, the market assigns a 70% likelihood to the prospect of the Fed reducing rates by 25 basis points in December; in a low interest rate environment, non-yielding gold often gains favor among investorsBefore the release of the Personal Consumption Expenditures (PCE) price index data, there was a marked rise in gold prices of about 1%. The preceding Monday, however, experienced a dramatic drop of $100 in gold prices, marking the largest single-day decline in over five months, following a ceasefire agreement between Israel and Hezbollah-backed Lebanon, which diminished safe-haven demandBy Tuesday morning, gold had plummeted to its lowest levels since November 18. The corrective demand following such a significant drop provided some upward momentum for goldYet, caution remains as the prices face multiple resistance levels, including key moving averagesNevertheless, the downturn in the dollar and U.STreasury yields may lure in bargain hunters, offering some support to gold prices.

Consumer expenditures in the United States displayed robust growth in October, yet the recent progress in mitigating inflation seems to have hit a plateau.

Data revealed that U.S. consumer spending rose by 0.4% in October, slightly surpassing economists' expectations of a 0.3% increaseMoreover, the previous month's growth was revised upwards to 0.6%. Adjusted for inflation, consumer spending saw only a modest gain of 0.1%. This increase was largely fueled by a strong demand for services, which rose by 0.5%, while expenditures on goods remained flatThe low unemployment rate has considerably bolstered consumer spending, aided by a buoyant stock market and elevated home values that have strengthened household balance sheetsHousehold savings rates also increased, climbing from 4.1% in September to 4.4%. Fueled by a 0.5% increase in wages, disposable income rose by 0.6% in OctoberAfter accounting for inflation and taxes, household disposable income experienced a modest increase of 0.4%, following a slight uptick of 0.1% in September.

Economists maintain a positive outlook for this year’s holiday shopping season, despite high prices squeezing budgets

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Data from Adobe indicated that online consumer spending during the first 24 days of November reached $77.4 billion, marking a 9.6% year-over-year increaseAlthough inflation appears to be cooling, the pace of this decline has slowedThe PCE price index for October rose by 0.2%, consistent with the previous month's increasesOn a year-over-year basis, the PCE price index moved higher to 2.3%, up from 2.1% in SeptemberWhen volatile food and energy categories are excluded, the core PCE price index also experienced a gain of 0.3%, matching September's performance, with year-over-year increases hitting 2.8% from the 2.7% observed the previous monthThis core index is favored by the Federal Reserve in shaping monetary policySome apprehensions arise about the potential for inflation to rise sharply next year if promises from the incoming administration to impose higher tariffs on imported goods from Mexico and Canada come to fruitionGoldman Sachs economists estimate that such tariffs could add 0.9% to the core PCE price index.

Nonetheless, signs of slack in the job market are increasingly evident, which may overshadow concerns about rising inflation dataAccording to the Labor Department’s report, the number of initial unemployment claims dipped by 2,000 to a seasonally adjusted total of 213,000 for the week ending November 23, marking the lowest level since AprilEconomists had expected this figure to reach 216,000. The report also noted a rise in the total number of continuing unemployment claims, which increased by 9,000 to 1.907 million, the highest level since November 2021. This figures as an indicator of recruitment trends, as continuing claims data aligns with the period during which the government surveys households regarding unemployment ratesThe number of continuing claims elevated between October and November, suggesting many laid-off workers struggle to find new employmentFor two consecutive months, the unemployment rate has steadied at 4.1%. November’s employment report will be critical in informing the Federal Reserve's rate decisions come December

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