Gold rises for the second day in a row as investors bet on more Fed rate cuts.
Gold price (XAUUSD) attracted some follow-through purchasing for the second day in a row on Friday, recovering further from a nearly three-week bottom near $2,602 hit the day before. A increase in the US weekly unemployment claims indicated signals of weakening in the labor market and should allow the Federal Reserve (Fed) to continue decreasing interest rates. rates. This results in a minor fall in US Treasury bond yields, which, together with a milder risk tone, prove to be crucial factors benefitting the non-yielding yellow metal.
Meanwhile, stronger-than-expected US consumer inflation data reported on Thursday precludes the chance of another big interest rate decrease by the Fed in November. This helps the US Dollar (USD) to halt its overnight retracement decline from its highest level since mid-August and may discourage traders from placing strong bullish wagers on the gold price. Nonetheless, the XAUUSD has reversed a significant portion of its weekly losses, with traders now looking to the US Producer Price Index (PPI) for a new push.
Daily Digest Market Movers: Gold price gains after Fed rate cut bets, lower risk tone.
The US Labor Department stated on Thursday that the headline Consumer Price Index gained 2.4% in the year to September, while the core gauge, which includes food and energy prices, increased 3.3%.
The stronger US consumer inflation statistics encouraged speculation about a slower pace of rate cuts by the Federal Reserve, sending the US Dollar to a nearly two-month high, albeit the initial reaction faded swiftly.
The number of Americans seeking unemployment benefits jumped by 33,000 to a seasonally adjusted 258,000 in the week ending October 5, compared to 230,000 predicted, indicating weakening in the US labor market.
Fed has altered its priority to achieving maximum sustainable employment.
Given that the Fed has altered its priority to achieving maximum sustainable employment, the conflicting data suggests
that the US central bank will continue to decrease interest rates, which will support the non-yielding gold price.
Meanwhile, the yield on the benchmark 10-year US government bond remains above 4%, providing a tailwind for the Greenback and potentially limiting any advances for the XAUUSD.
China’s finance ministry will hold a conference on Saturday and offer additional details about fiscal stimulus plans, underpinning risk sentiment and limiting any substantial upside for the commodity.
Traders are now looking forward to the release of the US Producer Price Index (PPI) report, which will increase USD demand and create short-term possibilities for the precious metal moving into the weekend.
