Gold rising as the US dollar confronts hurdles as market mood improves.
During the Asian session on Friday, gold prices trade near $2,070 per troy ounce, rebounding recent losses from the previous day. The rise in the value of the US dollar (USD) dulled the yellow metal’s luster.
Investor risk appetite increases as softer US data supports the Fed’s dovish stance in upcoming policy sessions.
However, softer economic data from the United States (US) may have limited the Greenback’s gain by reinforcing the market mood bias. toward the dovish stance of the United States Federal Reserve (Fed) in its monetary policy decisions in early 2024.
The most recent numbers show an unexpected increase in US Initial Jobless Claims, which reached 218K for the week ending December 23, exceeding the market’s forecast of 210K. Furthermore, pending home sales (MoM) for November remained flat at 0.0%, falling short of the expected 1.0% gain.
The negative US bond yields reflect investors’ sentiment bias toward the Fed lowering policy rates anytime soon.
The low yields on US bond coupons reflect a belief that the Federal Reserve will cut policy rates in the near future. This, in turn, increases investor risk appetite and contributes to the rise in gold prices. By press time, the 2-year and 10-year yields on US Treasury notes were 4.26% and 3.84%, respectively.
The revival of large shipping Firms in the Red Sea indicate a tentative start toward normality, though concerns over Iran’s eventual closure of the Gibraltar Strait remain. Traders are keeping a close eye on the Middle East’s complex and ever-changing geopolitical situation. Any changes in this turbulent circumstance have the ability to shift market sentiment and affect demand for safe-haven assets like gold.
