The price of gold experienced a slight decline on Tuesday, ending its three-day winning streak and hovering near $2,018 per troy ounce during Asian trading hours. The dip in gold prices can be attributed to the strengthening US Dollar (USD), which is gaining momentum due to higher US bond yields. The rise in bond yields puts downward pressure on non-yielding assets like gold.
Market participants are eagerly awaiting the release of the Federal Open Market Committee (FOMC) meeting minutes scheduled for Wednesday. The minutes could provide valuable insights into the Federal Reserve’s perspective on the future trajectory of interest rates.
ANZ has forecasted that the Federal Reserve (Fed) will initiate a rate-cutting cycle starting from July 2024. The CME FedWatch Tool indicates a 53% probability of a 25 basis points rate cut by the US Fed in the June meeting.
Dovish remarks from Fed officials, suggesting potential rate cuts in 2024, undermined the US Dollar on Monday. San Francisco Federal Reserve President Mary C. Daly stated that three rate cuts are a reasonable baseline for 2024. Additionally, St. Louis Federal Reserve President James Bullard proposed that the Fed consider lowering interest rates at its March meeting.
The US Dollar Index (DXY), measuring the USD against six major currencies, ended its four-day losing streak and is trading higher around 104.40. The 2-year and 10-year yields on US bond coupons are currently standing at 4.65% and 4.30%, respectively. The release of the FOMC meeting minutes will likely influence the direction of gold prices in the coming sessions.
