Gold fluctautes as US dollar ignores Fed’s hawkishness

Gold spot price fluctuated on Monday, reaching a $1,912 daily low before settling at $1,925. On Wednesday, investors weighed mixed nonfarm payroll reports and US inflation data, leading to a fall in US bond yields.

The US Dollar index dropped to its lowest point since May at 101.95. The Federal Reserve’s cautious approach may be necessary to protect the US dollar from future losses if wage inflation persists. The Consumer Price Index (CPI) statistics will provide further information on national inflation expectations.

The 2-year bond yield at 4.86% and 5- and 10-year rates at 4.23% and 4%, respectively, decreased overall. The likelihood of another increase this year is around 40%, and investors have already included a 25 basis point increase for the following Fed meeting.

In the early hours of Tuesday’s Asian session, bears were pushing below the 101.90 support, keeping the US Dollar Index (DXY) at its lowest levels in three weeks. The dismal US job figures and lower US Treasury bond yields weigh heavily on the greenback’s index versus the six major currencies. The risk-taking mindset puts downward pressure on the DXY as China signals economic apprehensions.