During the Asian session on Monday, the price of gold experienced a dip, nearing $2,310 per troy ounce after reaching a new record high just last Friday. The precious metal faces challenges primarily stemming from higher US Treasury yields, which diminish the appeal of non-yielding assets like gold.
The recent uptick in the US Dollar has added downward pressure on gold prices, as it becomes more expensive for investors holding other currencies to purchase gold, leading to a decline in demand for the precious metal.
The US Dollar Index (DXY) is trading higher around 104.40, supported by 2-year and 10-year yields on US Treasury bonds standing at 4.77% and 4.42%, respectively. The robust Nonfarm Payrolls (NFP) report has reinforced a bullish outlook for the Greenback, with the likelihood of a rate cut in June from the Federal Reserve (Fed) depreciating to 46.1%, according to the CME FedWatch Tool.
The NFP report for March revealed a significant increase of 303,000 jobs, surpassing expectations of 200,000. However, the previous month’s growth was revised downward from 275,000 to 270,000, slightly tempering the overall positive sentiment.
Federal Reserve Bank of Dallas President Lorie K. Logan emphasized on Friday that, in light of the upside risks to inflation, she deems it premature to consider cutting interest rates. Stressing the importance of resolving economic uncertainties before making such decisions, Logan underscored the need for the Federal Open Market Committee (FOMC) to remain prepared to respond appropriately if inflationary pressures persist.
