Slight increase in the USD draws some intraday sellers in the gold price, but there is little continuation.
During the early part of the European day on Wednesday. The price of gold (XAUUSD) retreats to the lower end of its intraday trading range. As it finds it difficult to build on its slight intraday gains.
The US dollar (USD) flirts with a one-week high reached and draws some dip buyers. The day before, there were rumors that the Federal Reserve (Fed) could decrease interest rates sooner than expected. This is further supported by the US Treasury bond yields rising, which is considered to be one of the main factors impeding the non-yielding yellow metal.
Deeper losses should be prevented by geopolitical threats, Fed rate reduction bets, and China’s economic difficulties.
However, the current price in the market suggests that there is a higher likelihood that the US Federal Reserve would begin to loosen its monetary policy as early as March. This might continue to bolster the price of gold, combined with worries about China’s shaky economic recovery and geopolitical dangers. In addition, traders may decide against making strong direction bets prior to the FOMC meeting minutes, which may provide hints regarding the Fed’s upcoming policy actions. Meanwhile, the Data from JOLTS Job Openings and the US ISM Manufacturing PMI could give some encouragement.
Daily Market Movers: A further increase in US bond yields threatens the price of gold.
A number of encouraging elements help the price of gold gain momentum on Wednesday and end a three-day losing run.
Interest rate bets that the Federal Reserve will make in March end up being a major source of support for the unyielding yellow metal.
In addition to China’s economic problems, the potential for more war escalation in the Red Sea is another factor supporting the safe-haven metal.
The official Chinese PMI, which was made public over the weekend. Showed minimal evidence of recovery towards the conclusion of the survey. And continued to show declines in manufacturing activity. China’s factory activity increased more quickly in December, according to a private survey released on Tuesday, but company optimism for 2024 remained low.
A steep increase in US bond yields helps the US dollar hold its big overnight. Advances to a peak that has beyond a week, capping the commodity.
Traders may possibly decide to hold off until after the release of the important FOMC meeting minutes and US macrodata.
Ahead of the US ISM Manufacturing PMI, JOLTS Job Openings data. And the significant FOMC meeting minutes. Traders may also choose to stay out of the market.
