XAU/USD trades flat above $2,060 amid the quiet session

• Gold price holds ground near $2,065, unchanged for the day.
• The recovery in USD and US Treasury bond yields weighs on the yellow metal.
• US Initial Jobless Claims increased to 218,000, above the forecast of 210,000; Continuing Claims were 1.875 million, the highest in four weeks.

Gold price (XAU/USD) hovers around $2,065 after retracing from $2,088 during the early Asian session on Friday. The rebound in US Dollar (USD) and higher US Treasury bond yields weigh on the yellow metal. The downside of gold might be limited amid the anticipation of a rate cut by the Federal Reserve (Fed) in March 2024.

Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD against a weighted basket of currencies used by US trade partners, recovers from the lowest level since July near 100.85 to 101.20. The Treasury yields edge higher, with the 10-year yield standing at 3.85%.

The core PCE Price Index, the Federal Reserve’s preferred inflation gauge, cooled to a 3.2% annual rise in November. The United States has experienced the greatest expansion of any large economy, and unemployment is nearing historic lows. Investors believe the Federal Reserve (Fed) is done with its rate hike cycle and will cut interest rates as early as March of next year.

On Thursday, Initial Jobless Claims in the United States increased to 218,000 for the week ending December 23, above the market’s forecast of 210,000. The number of Continuing Claims was 1.875 million, the highest in four weeks. Finally, Pending Home Sales remained flat in November, falling short of the market estimate of a 1% gain.

Gold traders will focus on the Chicago Purchasing Managers’ Index for December, due on Friday. This figure might not trigger action as traders enter holiday mode heading into 2024.