Gold price remains over $1,920 due to a weak US dollar (USD).
During the Asian session on Monday, the gold price is hovering over $1,920. Yellow metal prices ended a losing streak on Friday as the US Dollar (USD) pared intraday gains. Which might be ascribed to a drop in US Treasury rates.
A positive 10-year US Treasury yield might provide support for the US dollar.
US bond rates have recovered, with the 10-year US Treasury note yield rising to 4.45%, a 0.50% gain as of press time.
According to the most current S&P Global statistics, business activityIn September, the United States (US) stayed basically unchanged. The S&P Global Manufacturing PMI rose to 48.9 from 47.9 the previous month, above expectations of 48.0.
However, the Services PMI fell to 50.2 in August from 50.5 in July, falling short of the expected figure of 50.6. The Composite rating, which provides an overall picture of business activity, was 50.1, in line with expectations, although slightly lower than August’s 50.2 level.
The US Dollar Index (DXY), which measures the value of the US dollar against six major currencies, is trying to gather traction, languishing around 105.60 at the time of writing.
Fed members’ hawkish statements may have an impact on precious commodities such as gold.
Furthermore, Boston Fed President Susan Collins has indicated that further tightening is likely, Although she has highlighted the importance of patience. Furthermore, Michelle W. Bowman, Governor of the United States Federal Reserve (Fed), shared similar thoughts, claiming that additional rate rises are required to keep inflation under control.
Rising interest rates raise the opportunity cost of investing in non-yielding assets, implying a bleak prognosis for precious metals such as gold.
The Fed has highlighted the significance of sustaining higher interest rates for a lengthy period of time. In order to restore inflation to the 2% objective. This posture has increased market expectations for at least one more 25-basis-point rate increase before the end of the year.
Furthermore, the Fed’s “dot plot” now predicts only two rate rises in 2024. Down from the earlier prediction of four.
The US economic calendar for the following week will contain major data releases such as Consumer Confidence. Durable Goods Orders, Initial Jobless Claims, and others. The Fed’s favored inflation gauge is the Core PCE.
The annual Core PCE statistic is predicted to fall from 4.2% to 3.9%. These metrics may give further guidance for gold prices.
