Gold price is falling as bond yields in the United States rise, but the downside appears to be limited.
The gold price (XAUUSD) meets with new supply on Thursday, eroding some of the previous day’s rebound gains from a nearly four-week low. On Wednesday, Federal Reserve Chairman Jerome Powell told reporters. That inflation was too high and that progress in lowering it was questionable. This signals that the Fed will maintain rates higher for longer. Which operates as a tailwind for US Treasury bond yields while reducing demand for the non yielding yellow metal.
Aside from that, a generally optimistic risk tone is viewed. As another reason putting downward pressure on the safe-haven gold price.
Traders, on the other hand, may want to hold off on placing aggressive bets until the US NFP report on Friday arrives.
Meanwhile, the US Dollar (USD) fails to attract buyers and remains near a two week low reached last Friday. As Powell minimized the likelihood of more interest rate hikes. This, in turn, should give some support to the XAUUSD. Limiting the downside ahead of Friday’s much expected US Nonfarm Payrolls (NFP) report.
Daily Market Movers: Gold price is pushed down by aggressive Fed and a favorable risk tone.
Fed Chairman Jerome Powell warned on Wednesday that interest rates will remain high. For longer as disinflation has slowed in recent months, acting as a drag to the gold price.
US Treasury bond yields reversed some of the previous day’s post-FOMC drop. Boosting demand for the US dollar and limiting the gain for the non-yielding yellow metal.
Meanwhile, global risk sentiment rose as Powell indicated that the Fed’s next step was still expected to be an interest rate cut, undermining the safe-haven XAUUSD.
This, combined with diminishing geopolitical tensions, means that the commodity’s path of least resistance is to the negative. Albeit the absence of selling calls for caution from pessimistic traders.
Investors may also decide to move to the sidelines. advance of the release of the much regarded US monthly employment data, often known. As the Nonfarm Payrolls (NFP) report on Friday.
Meanwhile, Thursday’s US economic docket, which includes Challenger Job Cuts. The regular Weekly Initial Jobless Claims, and Trade Balance data, will be relied upon for short-term trade impetus.
