Gold price stands firm near a one-month high amid bets for additional rate cuts by the Fed.
Gold price (XAUUSD) enters a bullish consolidation phase during the Asian session on Friday and oscillates in a range around the $2,715 region, just below a one-month high touched the previous day. Expectations that softer inflation in the US will allow the Federal Reserve (Fed) to cut interest rates further this year led to the recent decline in the US Treasury bond yields with the US Dollar (USD). This, in turn, viewed as a critical aspect that continues to support the non-yielding yellow metal and provides hope for further growth.
The recent pullback in the US bond yields and the USD further underpin the precious metal.
The lessening of anxieties over US President-elect Donald Trump’s disruptive trade tariffs, along with the Israel-Hamas ceasefire agreement, keeps the safe-haven gold price under control. Aside from that, rising expectations that the Fed would pause its rate-cutting cycle later this month, a slight US Dollar (USD) increase, and speculations on a Bank of Japan (BoJ) rate hike next week cap the precious metal. Nonetheless, the XAUUSD expected to rise for the third week in a row as traders anticipate for a boost from US housing market statistics.
Israel-Hamas ceasefire deal holds back bulls from placing fresh bets around the XAUUSD pair.
The gold price gains strength from forecasts that The Federal Reserve expected to lower interest rates twice this year, resulting in a boost to the non-yielding gold price. Fed Governor Christopher Waller stated on Thursday that inflation expected to decrease further, with three or four rate cuts possible this year if US economic data weakens further. 0.4% in December and the prior month’s estimate also revised higher to reflect a 0.8% growth.
Furthermore, the Philly Fed’s Manufacturing Index outperformed even the most bullish expectations and rose to the highest level since April 2021, to 44.3 this month from a corrected -10.9 in December.
Separately, the US Labor Department stated that jobless claims, a crucial indicator of the strength of the US labor market, increased from 203K the previous week to 217K in the week ending January 10.
The statistics confirmed expectations that the Fed will pause its rate cycle later this month, citing concerns that US President-elect Donald Trump’s plans may fuel inflation.
Israeli Prime Minister Benjamin Netanyahu declared on Friday that a cease-fire agreement will pause 15 months of fighting. A deal with Hamas to release captives detained in Gaza has been reached.
Building Permits, Housing Starts, and Industrial Production numbers are due out on Friday in the United States, which may have an impact on the USD and precious metals.
