On Thursday, the price of gold faced modest losses following robust economic data from the United States, highlighting the nation’s resilient economy. The US Bureau of Labor Statistics (BLS) reported a drop in unemployment claims for the latest week compared to the previous one, underlining strong employment figures.
Business activity, although showing signs of a slowdown from its previous momentum, continues to expand. The Flash PMIs for February, disclosed by S&P Global, presented a mixed picture but overall maintained an expansionary trajectory. This reinforces the argument that the Federal Reserve (Fed) is likely to persist with higher interest rates.
The XAU/USD traded within the range of $2,020-$2,024, marking a marginal 0.06% decline. Investors in the gold market are closely monitoring the economic developments in the US.
The rise in US Treasury bond yields, particularly on the short end of the curve, signals investor skepticism regarding potential rate cuts in the upcoming March or May meetings. The recently released minutes from the Federal Open Market Committee (FOMC) meeting emphasized the Fed’s commitment to addressing inflation concerns. Policymakers indicated a cautious stance, stating they would not consider lowering interest rates until they gained “greater confidence” in core inflation moving sustainably toward the 2% target.
Despite acknowledging a more balanced risk scenario for achieving mandates, the FOMC reiterated its commitment to a data-dependent approach in making decisions related to policy easing. The minutes revealed a hesitancy among Fed officials to implement rate cuts prematurely, underscoring their vigilance toward inflationary risks amid a backdrop of economic risks skewed to the downside.
