Gold prices (XAU/USD) are consolidating around the $2,360-2,365 range during the European session on Friday, following a robust surge to a two-week high the previous day. The commodity’s movement is being influenced by the US Treasury bond yields, which are building on Thursday’s gains in anticipation of new supply next week. This upward pressure on yields is countering gold’s momentum.
Thursday’s softer US economic data reinforced expectations that the Federal Reserve might commence its rate-cutting cycle later this year. This outlook is limiting the US Dollar’s (USD) appeal, providing a supportive backdrop for gold, a non-yielding asset.
The Bank of England’s (BoE) dovish stance on Thursday has increased market bets for an interest rate cut in August. Similarly, the European Central Bank (ECB) and the Swiss National Bank (SNB) have also taken steps to reduce borrowing costs, with the SNB implementing its second rate cut of 2024 on Thursday.
Adding to the bullish sentiment for gold, the commodity’s price has sustained a breakout above the 50-day Simple Moving Average (SMA). This technical development suggests that the path of least resistance for gold is upward. Consequently, any potential pullbacks are likely to be viewed as buying opportunities.
Traders are now looking ahead to the flash global Purchasing Managers’ Indexes (PMIs) for further direction. As the market digests these developments, gold’s position appears robust, with corrective slides expected to remain limited.
