Gold price has struggled to recover from its two-week low recorded.

The gold price (XAUUSD) extended its consolidative price move below $2,300 during the Asian session on Thursday, and appears susceptible at a two-week low reached the previous day.

Fed hawkish approach, rising US bond rates, and recent USD gains have all acted as headwinds.

The Federal Reserve’s (Fed) hawkish surprise earlier this month, expecting only one interest rate drop in 2024, continues to support rising US Treasury bond yields and turns out to be a significant component operating as a Headwind for the non-yielding yellow metal. Aside from that, the underlying positive tone in global equities markets further limits the upside for the safe-haven precious metal.

Investors, meanwhile, are still pricing in two rate cuts by the Fed this year in response to evidence that US inflation is slowing. This prevents the US Dollar (USD) from capitalizing on the previous day’s strong advance to a nearly two-month high, but it does provide some support for the Gold price.

Geopolitical tensions and political instability serve to limit the negative impact on the safe-haven gold.

Furthermore, ongoing international tensions and political uncertainties should help limit the downside for the XAUUSD. Traders may also want to wait for significant US macro data, particularly the US Personal Consumption Expenditures (PCE) Price Index on Friday. , before making directional bets.

Daily Market Movers: Gold pricing is on the defensive amid Fed rate concerns and increasing US bond yields.

The Federal Reserve’s narrative of higher interest rates for longer periods of time continues to promote increased US Treasury bond yields and a strong US Dollar, undermining the non-yielding gold price.
According to a government report released on Wednesday, new home sales fell the most since September 2022, dropping 11.3% in May to 619K, the lowest level since November.
However, USD bulls appear unconcerned about the news, which adds to indications that the world’s largest economy is faltering despite recent signs of lessening inflationary pressures.
The Fed anticipated only one rate cut in 2024, but markets are still The Fed is expected to drop interest rates for the first time in September, followed by two 25 basis point decreases before the end of the year.
The uncertainty around the timing and amount of Fed rate reduction this year limits further USD appreciation and gives support to the XAUUSD amid ongoing global concerns.
Traders appear cautious ahead of the US presidential debate and the release of the US Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, on Friday.
Heading into the big data risk, Thursday’s US macro data – the final Q1 GDP print, Durable Goods Orders, Initial Weekly Jobless Claims, and Pending Home Sales – may provide some traction.