Gold prices have pulled back as investors opted to secure profits following a surge to an all-time high of $2,483 per ounce earlier in the North American trading session. This spike was driven by expectations that the Federal Reserve might soon lower borrowing costs. As of now, the XAU/USD is trading at $2,457, a decline of more than 0.40%.
Federal Reserve officials, including Governor Christopher Waller, made statements on Wednesday suggesting that the time to reduce the policy rate is approaching, indicating a likely downward trend for the Fed funds rate.
Richmond Fed President Thomas Barkin also commented on recent economic data, noting that inflation has decreased over the last quarter. He acknowledged that the current monetary policy is restrictive but is open to the possibility that it may not be as restrictive as previously thought.
In other economic news, US housing data for June exceeded expectations, signaling a robust economy. Both Building Permits and Housing Starts showed improvement compared to May, while Industrial Production slowed but still surpassed forecasts.
The recent upswing in gold prices was also influenced by former President Donald Trump’s remarks advocating for tax cuts, lower interest rates, and increased tariffs. Such measures would likely drive inflation higher and weaken the US dollar.
Reflecting these dynamics, the US Dollar Index, which measures the dollar’s performance against six major currencies, dropped approximately 0.49% to 103.72, marking its lowest level since March 21, 2024. Additionally, US Treasury bond yields declined across the board, with the 10-year Treasury note yielding 4.14%, down nearly one and a half basis points.
