The gold price (XAU/USD) has experienced a recovery from a near three-week low, hovering around the $2,017-2,016 region. The boost comes as US Consumer Inflation Expectations fall, increasing market expectations that the Federal Reserve (Fed) may consider cutting interest rates as early as March. This perception has fueled demand for the non-yielding precious metal.
However, the intraday uptick lacks strong bullish conviction, as the US labor market remains resilient, supported by upbeat monthly employment details released last Friday. The hawkish remarks from several Fed officials have added uncertainty regarding the timing of interest rate cuts, allowing the yield on the 10-year US government bond to stay above 4.0%. This has provided support to the US Dollar (USD) and limited gains for gold.
Investors are adopting a cautious stance and waiting for the release of the latest US consumer inflation figures before determining the near-term trajectory for gold. The generally positive tone in Asian equity markets is also influencing investor sentiment. This cautious approach is evident in the gold market, with investors refraining from aggressive bets while awaiting further clarity on the Fed’s future policy moves.
