Gold prices recouped some of Wednesday’s losses, rising by 0.41% on Thursday following the release of the US Gross Domestic Product (GDP) report, which indicated a slowing economy. This development has rekindled speculation that the US Federal Reserve (Fed) might consider cutting interest rates later this year.
The XAU/USD pair was trading at $2,347, recovering from daily lows of $2,322. Concurrently, the yield on the US 10-year Treasury note plummeted by nearly seven basis points to 4.548%, and the US Dollar Index (DXY) fell by 0.43% to 104.67.
The US economy’s growth decelerated compared to the fourth quarter of last year, reflecting the impact of the Fed’s higher borrowing costs. Additionally, the US Department of Labor reported an uptick in unemployment benefit applications.
Notably, New York Fed President John Williams made headlines with his remarks on the current monetary policy stance. He asserted that the policy is appropriately positioned, acknowledging that inflation remains too high and emphasizing no immediate need to cut interest rates. Williams projected that inflation would align with the Fed’s 2% target by early 2026.
Despite Williams’ hawkish tone, gold prices remained stable at their current levels. The US housing market is also showing signs of weakness, as evidenced by the National Association of Realtors’ Pending Home Sales data.
Looking ahead, traders are focusing on the upcoming release of April’s Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge. Expectations for the core PCE figure are set at a 2.8% year-over-year increase, while the headline PCE is anticipated to rise by 0.3% month-over-month.
