Key Takeaways

  • Spot gold rises 0.5% during Thursday’s session after PCE data falls in line with expectations 
  • US dollar continues to weaken, capping off November with a 3% loss

Gold’s Rise

Spot gold surged in November, brushing against $2,046/oz Friday morning, a peak unseen since early May 2023. Jumping  2% for the week and wrapping up the month with a 3% gain, the yellow metal’s upward trend was supported by a weaker US dollar. US February gold futures rose a modest 0.1%, to trade at $2,056 per troy ounce. 

The precious commodity secured a second consecutive month of wins as a softer dollar takes the backseat. In that context, the buck index was changing hands at 103.33 Friday morning, setting itself up to spend a third week in the red. For international investors, a softer dollar makes gold less expensive, making it an attractive addition to their portfolios. 

Standing as a safe-haven asset, non-yielding gold continues to be buoyed by fears of an escalation in the ongoing Israel-Hamas conflict. Renewed fighting between the opposing militant groups after a mutually agreed short-term ceasefire is leading investors to seek refuge in perceived “safer” investments. 

Geopolitical uncertainties aside, soft economic personal consumption expenditures (PCE) data has further bolstered expectations that the Federal Reserve will hold its benchmark interest rate steady at its Dec.12 – Dec. 13 gathering. In light of this, investors are even beginning to entertain the idea of the Fed cutting rates in early 2024.

Serving as the Fed’s preferred gauge of inflation, the PCE results were mostly in line with expectations. Core PCE (which excludes volatile food and energy prices) rose 0.2% for the month, a 3.5% increase on a year-on-year basis, slowing down from 3.7% a month prior. Headline inflation stayed flat at a 3% year-on-year rate.

However, it’s worth noting New York Fed President John Williams’ comments on Thursday, where the governor reiterated the Fed’s commitment to battling inflation to its 2% goal, even if it means keeping rates at a “restrictive” level.

Wrap Up

Major US stocks waved off a prosperous November from a sea of green. The broad-based S&P 500 notched up over 8% for the month, while the Dow Jones Industrial Average crushed its best month of 2023 with an 8.8% gain. The tech-heavy Nasdaq outperformed its peers with a 10% rise, boosted by better-than-expected Salesforce earnings.

Later today, all eyes are on Fed Chair Jay Powell as he gets set to speak at Atlanta’s liberal arts-focused Spelman College. With the latest economic data, including the PCE and the Fed’s Beige Book report, showing a slowdown in inflation and a cooling labor market, investors will hang on to every word as Powell may hold the key to interest rate insights.

In all, as November passes the baton to December, it could be a good time to redefine your year-end strategy. Consider reassessing your goals and diversifying your portfolio among different assets to position yourself for a strong and strategic finish to the year.