Gold prices on Comex are nearing a three-week high at $2,089 USD, propelled by a surprising drop in the US core PCE price index to 3.2%. This unexpected shift has increased bets on an early Fed interest rate cut, with over 75% probability priced in by March, according to CME Fedwatch.
The decline in inflation provides a favorable starting point for the Fed in 2024, potentially leading to a soft economic landing without triggering a recession. Durable goods orders for November surpassed expectations, rising by 5.4%, boosting consumer confidence reflected in the December Consumer Sentiment Index reaching 69.7.
Anticipation of a significant Fed rate cut has weighed on the US dollar and short-term treasury yields, impacting foreign capital inflows negatively. The US Dollar Index is at a five-month low below 101.50, while the 10-year US treasury bond yield dropped to around 3.87%.
This week's economic calendar is light due to the holiday season, with attention on weekly unemployment claims for additional insights.