Gold prices rebounded during the mid-North American session, driven by a decline in US Treasury bond yields, which exerted downward pressure on the US dollar. The XAU/USD pair is currently trading at $2,404, reflecting a 0.33% increase.
Wall Street has experienced gains for the second consecutive day as investors digest recent US political developments. The market is anticipating the release of key economic data, including June’s inflation figures and the preliminary Gross Domestic Product (GDP) report for Q2 2024.
After a four-day losing streak, non-yielding metals are showing signs of recovery. Market participants are awaiting the Federal Reserve’s anticipated interest rate cut. A Reuters poll revealed that 73 out of 100 economists predict a 50 basis points (bps) reduction in 2024, while 13 expect a 25 bps cut and three foresee no changes.
Traders are speculating that the Fed’s first 25 bps rate cut may occur in September, with the CME FedWatch Tool indicating a 96% probability.
In the meantime, the yield on the US 10-year Treasury bond has decreased by 1.5 bps to 4.24%, providing a supportive environment for gold prices.
The Core Personal Consumption Expenditures (PCE) Price Index may be a critical factor influencing the Fed’s decision to adjust monetary policy. Reuters sources suggest that weaker-than-expected PCE data could bolster market expectations for a policy easing in September.
Gold prices were also buoyed by India’s decision to reduce import taxes on gold and silver, potentially boosting retail demand.
The US Dollar Index (DXY), which measures the dollar against a basket of six other currencies, has risen by 0.17% to 104.45. This slight increase has kept gold prices anchored around the $2,400 level despite the recent gains.
