Gold price experienced a retracement after reaching the 50-day Simple Moving Average (SMA) at $2,033.67 during the European session, declining by 0.40% as the US Dollar (USD) weakened. However, a concurrent increase in the US 10-year Treasury yield and traders adjusting their expectations of a dovish stance from the US Federal Reserve (Fed) contributed to downward pressure on the non-yielding metal. The XAU/USD pair is currently trading at $2,026.93 after reaching a high of $2,037.07.
Sentiment surrounding gold remains mixed, albeit slightly negative, with a bias favoring the US Dollar. Speculation on interest rates indicates that traders have priced out the possibility of a Fed rate cut in March and May.
However, the odds of a quarter-percentage-point rate cut in June stand at 50%. The US 10-year Treasury note recorded a climb of four-and-a-half basis points to reach 4.295%, although it remains shy of the year-to-date (YTD) high of 4.354%. This upward movement in Treasury yields, coupled with investors aligning themselves with the Fed officials’ stance of three rate cuts by the end of 2024, continues to exert pressure on the price of gold.
