In the Asian session on Wednesday, the gold price (XAU/USD) experiences a minor decline, struggling to build upon the weekly gains achieved in the preceding two days. Currently hovering around the $2,040 supply zone, the precious metal appears poised for further appreciation following the Federal Reserve’s (Fed) recent dovish shift. Last week’s release of the “dot plot” indicated that the Fed’s stance on inflation does not necessitate another rate hike, suggesting that the key interest rate has already peaked at its current 22-year high of 5.25-5.50%. This has kept US Treasury bond yields near a multi-month low, serving as a supportive factor for the non-yielding gold.
Despite these factors, a series of statements from Fed officials attempting to temper rate cut expectations, coupled with a modest uptick in the US Dollar (USD) and positive sentiment in global equity markets, is restraining any significant upward movement in the gold price. Additionally, traders are choosing to remain on the sidelines ahead of the release of the US Core Personal Consumption Expenditure (PCE) Price Index on Friday. This crucial US inflation indicator is expected to influence future Fed policy decisions and could provide a new directional impetus for XAU/USD.
In the interim, market participants on Wednesday will closely watch for cues from the Conference Board’s release of the US Consumer Confidence Index, which could contribute to shaping near-term trading sentiment.
