Gold price is unable to attract any significant purchasers despite the introduction of new USD buying.
The gold price (XAUUSD) edged higher throughout the Asian session on Friday. Despite a lack of follow-through purchasing and remaining below the overnight swing high.
Bets that the Fed will maintain interest rates higher for longer periods of time due to persistent inflation have boosted USD demand.
As markets look past the lower US GDP print, rising agreement. That the Federal Reserve (Fed) would postpone interest rate cuts amid persistently high inflation boosts US Dollar (USD) demand. This, together with a The generally upbeat tone in the equities markets turns out to be a significant obstacle for the safe-haven precious metal.
A favorable risk tone helps to cap the XAUUSD ahead of the US PCE Price Index.
The downside for the gold price, however, remains muted. As USD bulls may prefer to wait for more clues about the Fed’s rate-cutting path before placing new wagers. As a result, the attention remains on the release of the US Personal Consumption Expenditures (PCE) Price Index. The vital inflation statistics will have a significant impact on the Fed’s future policy decisions. Which will fuel USD demand and define the next leg of a directional move for the non-yielding yellow metal.
Daily Market Movers: Gold price bulls appear uncommitted ahead of the critical US inflation data.
The The US GDP report released on Thursday revealed a severe downturn in economic growth and tenacious inflation. Which is viewed as a key factor supporting the gold price.
According to US Commerce Department data. The world’s largest economy grew by 1.6% on an annualized basis in the first quarter, the slowest pace since mid-2022.
Additional report details revealed that underlying inflation climbed more than predicted, by 3.7%, reinforcing predictions that the Federal Reserve will maintain interest rates higher for longer.
The yield on the benchmark 10-year US government bond soared up to the highest level in more than five months in response to the conflicting data, acting as a headwind for the yellow metal that produces no yield.
This, together with reduced expectations of further escalation of geopolitical tensions in the Middle East. Undermines the safe-haven precious metal and should help to limit the upside.
Meanwhile, US Dollar bulls prefer to wait for more clues about the Fed’s rate-cutting course. Focusing on the release of the Personal Consumption Expenditures (PCE) Price Index.
The critical inflation statistics will play an important part in influencing the Fed’s future policy decisions. And boosting USD demand, assisting in defining the commodity’s near-term trajectory.
