Gold is ready for the last high before the crash in 2024!

Gold has experienced a volatile trading day, initially dipping to $2,060 before rebounding to $2,070, effectively erasing its daily losses. This movement seems to be partly influenced by the decrease in the benchmark 10-year US Treasury bond yield, which fell more than 1% to below 3.85%. This decline in yields has provided support for the XAU/USD, assisting it in maintaining its position. The fluctuation in Gold's price is also linked to the US Dollar's performance. Despite a general slowdown in US Treasury bond yields, the USD is stabilizing due to a cautious market sentiment. This stabilization comes as investors return from the Christmas holiday and start catching up on trades and the latest macroeconomic developments, avoiding new directional bets in the process. Another factor influencing Gold's behavior is the anticipation surrounding the US Federal Reserve's (Fed) interest rate decisions for the upcoming year. There's a muted activity in the betting markets regarding the Fed's potential rate cuts in 2024, leaving investors uncertain. However, Gold had been on a three-day uptrend prior, fueled by growing expectations of Fed rate reductions. According to the CME FedWatch tool, there's currently a 79% likelihood of a rate cut starting in March 2024, with up to 153 basis points of cuts expected throughout the year. The sentiment toward the Fed's policy has been dovish, especially after recent data from the Commerce Department. The report indicated that the Core Personal Consumption Expenditures (PCE) Price Index, a key inflation measure for the Fed, saw only a slight increase in November and was up 3.2% year-over-year. This data pushed the US Dollar Index to a new five-month low of 101.43 and nudged the US Treasury bond yields toward multi-month lows, with the benchmark 10-year yield hovering around 3.85%. Looking forward, Gold investors are expected to proceed with caution. As markets fully reopen post-holidays, the trading week before New Year is anticipated to have reduced volumes, which could lead to heightened volatility in Gold prices. The upcoming US economic data, including the Richmond Fed Manufacturing Index, will be closely watched, although it's considered low-impact. Investors will be particularly attentive to the overall sentiment on Wall Street, which could significantly influence Gold's near-term trajectory.