Gold price (XAU/USD) attracts dip-buyers, maintaining stability above the $2,030 level as the US Dollar (USD) faces challenges amid declining US Treasury bond yields. The cautious sentiment in equity markets enhances gold’s safe-haven appeal. However, expectations that the Federal Reserve (Fed) will keep interest rates higher for an extended period limit the precious metal’s upside potential.
The USD experiences difficulties in gaining traction due to a fresh decline in US Treasury bond yields, providing support to gold. The commodity benefits from its safe-haven status, especially in the current cautious market environment. Despite this, the anticipation that the Fed will maintain higher interest rates hampers substantial upward movement in the non-yielding gold price.
Investors recalibrated their expectations for aggressive Fed policy easing following robust US consumer and producer prices, coupled with the resilience of the US economy. The recently released FOMC meeting minutes also indicated a lack of urgency among policymakers to implement interest rate cuts. This stance supports US bond yields, favoring the USD bulls and imposing a constraint on significant upward movements in gold.
Traders may exercise caution and avoid aggressive positioning ahead of Thursday’s release of the US Personal Consumption Expenditures (PCE) Price Index, which could provide fresh cues for market direction.
