XAU/USD gains traction below $2,000, US housing data eyed

• Gold price gains momentum around $1,982 on the lower US Treasury bond yields.
• The markets have priced in the end of the tightening cycle and expect a rate cut in the middle of 2024.
• Gold traders will focus on the US housing data on Friday.

Gold price (XAU/USD) extends its rally during the early Asian trading session on Friday. The uptick of the precious metal is bolstered by the fall in US Treasury bond yields. As of writing, the gold price is trading near $1,982, up 0.06% on the day.

Meanwhile, the US dollar Index (DXY), an index of the value of the USD measured against a basket of six world currencies, consolidates around 104.40. The US Treasury bond yields edge lower, with the 10-year yields standing at 4.44%.

The markets have priced in the end of the tightening cycle and expect a rate cut in the middle of 2024, which exerts some selling pressure on the US Dollar (USD) and boosts gold prices. The weekly US Initial Claims rose by 231,000, the highest level in nearly three months. While continuing jobless claims increased to their highest level since 2022, rising 1.865 million from 1.883 million in the previous reading. The US Industrial Production dropped 0.6% m/m in October from a 0.1% rise in the previous month, below the market consensus.

On Wednesday, US President Joe Biden and Chinese President Xi Jinping agreed to restore military-to-military interactions and collaborate on efforts to curb fentanyl production. That being said, the renewed tension between the US-China, the world’s largest economy, could lift the yellow metal further.

Moving on, the US Building Permit and Housing Start will be due on Friday. The Housing Starts are estimated to drop from 1.358 million to 1.35 million, while the Building Permits are forecast to drop from 1.471 million to 1.45 million. Traders will also take cues from the figures and find a trading opportunity around the gold price.