On Wednesday, gold prices continued their upward trajectory, reaching a three-week high of $2,390 per ounce. This surge was fueled by data released by the US Bureau of Labor Statistics (BLS), which indicated a slowdown in inflation, increasing the likelihood of a Federal Reserve (Fed) rate cut in 2024. Consequently, US Treasury bond yields plummeted, and the US Dollar Index (DXY) fell to a five-week low.
The XAU/USD pair traded at $2,384, reflecting a gain of more than 1%. Although consumer inflation remains above 3% on an annual basis, the monthly figures showed a deceleration, relieving some pressure on the Fed. US Treasury yields across the yield curve experienced significant declines of 8 to 10 basis points.
Additionally, other data from the US BLS revealed a weakening in consumer spending, with Retail Sales in April remaining stagnant at 0% month-on-month, falling short of the anticipated 0.4% increase.
Meanwhile, Federal Reserve officials continued to make headlines. Minneapolis Fed President Neel Kashkari expressed concerns about higher government debt potentially necessitating increased borrowing costs in the near term to achieve the targeted 2% inflation rate. Kashkari noted his surprise at consumer spending levels and raised questions about the impact of monetary policy restrictions on the economy.
The surge in gold prices amid these economic indicators underscores market volatility and investors’ cautious approach in response to evolving macroeconomic trends and central bank policies. Analysts will continue to closely monitor developments in inflation, consumer spending, and Fed commentary for further insights into the trajectory of gold prices and broader financial markets.
