Gold prices showed minimal movement during Wednesday’s North American session as trading activity remained subdued due to the observance of the Juneteenth holiday. Despite this, recent data from the United States continued to weaken, providing some relief to traders who anticipate the Federal Reserve (Fed) will implement two rate cuts this year. As a result, precious metals managed to regain some ground, although XAU/USD remained virtually unchanged, trading around $2,328 at the time of reporting.
US Retail Sales figures for May showed improvement compared to April, but downward revisions hinted at a slowing economy. This, coupled with last week’s significant consumer inflation report, has heightened expectations for a rate cut in September.
Additional economic indicators revealed that Industrial Production in May saw improvement following a downward revision in April figures.
According to the CME FedWatch Tool, the likelihood of a 25 basis points rate cut in September stands at 67%, up from 61% the previous day. Meanwhile, the December 2024 Fed funds futures contract suggests a potential 36 bps cut by year-end.
Federal Reserve officials addressed gold traders on Tuesday, emphasizing that inflation remains elevated and signaling they require more evidence of inflation moderating towards the 2% core inflation target.
US Treasury bond yields remained subdued, with the 10-year Treasury note yield declining by one-and-a-half basis points to 4.215%.
As markets await further economic indicators and Fed commentary, gold prices are expected to remain sensitive to developments surrounding US monetary policy and economic data releases.
