Gold remains flat Below the two week peak, positive potential is intact amid lower USD.
The gold price (XAUUSD) struggling to capitalize on its slight Asian session increase to a two-week high, trading just around $2,445 and almost unchanged for the day.
The Fed dovish attitude lowers US bond yields and continues to weigh on the USD.
The predictions for an immediate start of the Federal Reserve’s (Fed) rate-cutting cycle improve investors’ appetite for riskier assets. As seen by a generally upbeat tone around the equities market seen eroding the safe-haven asset.
The downside for gold remained muted in the aftermath of a moderate US Dollar (USD) decline, fueled by the Fed’s dovish view. In fact, the Fed boosted expectations for a rate cut as early as September while keeping US Treasury bond yields near a multi-month low, which continues to weigh on the dollar. Aside from that, geopolitical tensions in the Middle East provide some support for the safe-haven XAUUSD.
Daily Market Movers: Gold price fails to attract buyers with bullish risk tone; downside remains cushioned.
The Federal Reserve opted to keep its benchmark interest rate in the 5.25%-5.50% range, citing recent progress on inflation and labor market softening. Furthermore, at the post-meeting news conference, Fed Chair Jerome Powell hinted at a rate cut in September if inflation remains in line with expectations.
Moreover This follows the disappointing release of the ADP data, which showed a slowing in the labor market and wage growth, providing the Fed more reason to lower rates this year.
According to Automatic Data Processing (ADP), private sector employment in the United States increased by 122K in July, exceeding expectations of 150K, and yearly pay increased by 4.8% year on year.
Furthermore The 10-year US government bond yield fell to its lowest level since February in response to the dismal data and the Fed’s dovish stance, prompting aggressive US Dollar selling.
Aside from this, geopolitical dangers stem The continuous turmoil in the Middle East bolster demand for the safe-haven gold price, sending it to a new two-week high on Thursday.
The risk on mindset restricts gains as bulls retreat ahead of the US NFP on Friday.
The XAUUSD rising potential, however, may be constrained by the risk on drive. As traders now turn to Friday’s release of the US Nonfarm Payrolls report for substantial impetus.
