Gold price recovers from an intraday low amid global worries, rising US bond yields, and a weaker US dollar.
The gold price (XAUUSD) attracts some purchasing during the early European session and swings positive for the second consecutive day on Wednesday, but lacks follow-through and stays in a multi-day trading range below the $2,040-$2,042 zone. Traders moved out their estimates for the first interest rate cut by the Federal Reserve (Fed) into May. Since March, the US economy has remained resilient. This, combined with the underlying positive tone in the equities markets, serves as a significant barrier for the non-yielding yellow metal.
Traders may also avoid from making strong directional bets ahead of this week’s major US macroeconomic data.
However, ongoing concerns about further military action in the Middle East, as well as an uncertain global economic picture, continue to boost the safe-haven gold price. Furthermore, repeating US Treasury bond yields puts the US Dollar (USD) bulls on the defensive, which favors the commodity. Traders, however, appear reluctant to put aggressive directional wagers and prefer to wait for this week’s big US macro reports – the Advance Q4 GDP reading on Thursday and the Core PCE Price Index, the Fed’s preferred inflation gauge. – On Friday.
Daily Market Movers: Gold price fails to capitalize on small gains despite delayed Fed rate cuts predictions.
Falling US Treasury note rates keep US Dollar (USD) bulls on the defensive. And turn out to be a crucial factor supporting the gold market amid geopolitical tensions in the Middle East.
In response to a series of escalating attacks, US armed troops bombed three installations used by Iranian affiliated extremist organizations in western Iraq, heightening the danger of more Middle Eastern conflicts.
The incoming US macro data revealed that the economy is in good shape. Giving the Federal Reserve greater leeway to keep interest rates higher for longer. Which should limit non-yielding bullion.
Reduced bets on an early Fed interest rate decrease to limit USD losses and curb the metal’s potential.
The Current market pricing suggests that the Fed will drop interest rates for the first time in May, as forecast in March. And that policy easing will be less aggressive than investors currently expect.
The absence of substantial follow-through buying cautions bulls ahead of this week’s important macro releases. The flash global PMIs, the Advance US Q4 GDP reading, and the US Core PCE Price Index.
The critical US inflation report will influence expectations about the Fed’s future policy moves. Driving USD demand and determining the near-term trajectory for the XAUUSD.
