Gold price recovers an Asian session decline, but the intraday rise lacks positive confidence.
Gold (XAUUSD) attracts some dip-buying on the opening day of the new week and trades near a one-week high, at $2,660, heading into the European session. The US Producer Price Index (PPI) indicated a benign inflation outlook, implying that the Federal Reserve (Fed) will lower interest rates further.
Geopolitical threats and expectations that the Fed will lower rates continue to support the XAUUSD.
Geopolitical tensions in the Middle East Another aspect that contributes to the value of safe-haven bullion.
Meanwhile, investors have totally priced out the likelihood of another disproportionate interest rate cut from the US central bank in November. This maintains US Treasury bond yields rising and the US Dollar (USD) near its highest level since mid-August, which it reached last week, restricting gold price advances. Furthermore, the confidence generated by China’s commitment to increase debt in order to revitalize its economy calls for caution before initiating new bullish wagers on the XAUUSD pair.
Daily Digest Market Movers: Gold price bulls appear cautious amid minor USD rise.
The US Bureau of Labor Statistics announced that the headline Producer Price Index (PPI) for final demand increased by 1.8%, while the core measure In September, the annual growth rate increased by 2.8%.
The readings were slightly higher than consensus predictions, but they indicated a slowing in price growth, allowing the Federal Reserve to continue decreasing interest rates.
The odds of a less aggressive Fed easing boost the USD while capping the commodity’s gain.
According to the CME Group’s FedWatch Tool, the markets are currently pricing in a more than 90% possibility of the Fed cutting borrowing costs by 25 basis points in November.
The yield on the benchmark 10-year US Government bond, on the other hand, remains above 4% despite decreased prospects of the Fed’s more aggressive policy easing.
This, in turn, helps the US dollar to stand strong around a two-month peak and turns out to be a crucial element that prompts fresh selling around the gold price on the Today is the first day of the new week.
According to government statistics released over the weekend, China’s headline Consumer Price Index was flat in September, with a yearly rate of 0.4%, missing market forecasts.
This, combined with a lack of numerical details for China’s fiscal stimulus and rising geopolitical concerns in the Middle East, could provide support for the safe-haven precious metal.
The US market is closed on Monday for the Columbus Day holiday, leaving the XAUUSD vulnerable to USD price movements and new geopolitical developments.
