On Thursday, the price of gold (XAU/USD) experienced a decline following the attainment of a fresh three-week high. The retreat was attributed to profit-booking activities triggered by the substantial rally witnessed over the past two weeks. This decline coincided with an increase in the opportunity cost of holding the non-yielding precious metal, as US Treasury yields exhibited signs of recovery.
Despite the short-term dip, the overall outlook for the Gold price remains positive. Investors anticipate a reduction in interest rates by the Federal Reserve (Fed) starting in March, coupled with a clear downward trajectory in underlying inflation. The US Dollar continues to face selling pressure amid early expectations of a rate cut, providing support to the precious metal’s Dollar-denominated value.
Contrary to investor expectations, Federal Reserve policymakers downplay the likelihood of an immediate market reaction to rate-cut commentary from Chairman Jerome Powell. The Fed deems discussions around rate cuts as “premature” in the current scenario, citing a lack of confidence in inflation retreating towards the 2% target.
Simultaneously, the US Department of Labor has reported Initial Jobless Claims (IJC) for the week ending December 22. Jobless benefit claims rose to 218,000, surpassing the consensus of 210,000 and the previous reading of 206,000.
