Gold price declines on stronger Dollar

The Gold Index, XAU/USD, was trading down by roughly -0.33% earlier on Tuesday, in the $2,310s, but at the time of writing, it is only -0.20% down, trading at $2,319.56, as the US Dollar recovers, reducing the cost of Gold which is priced in USD.

Gold price declines on Tuesday after a rebound in the US Dollar reduces the cost of the precious metal in dollars.

Although last week’s US Nonfarm Payrolls data showed a weakening labor market that suggested the Federal Reserve (Fed) might cut interest rates sooner than had been anticipated, commentary from Fed members over the last few days continued to show a reluctance by policymakers to hurry lowering borrowing costs.

On Monday, Richmond Fed President Thomas Barkin said that the current interest rate level should cool the economy enough to bring down inflation to the Fed’s 2.0% target but that it would be a “stubborn road back,” and that, “It doesn’t mean you won’t get it back. It just means it takes a while”.

Meanwhile, New York Fed President John Williams stated that there would be rate cuts eventually and that he saw job growth moderating, but that the Fed would be looking at the “totality” of data before making its decision.

Markets have priced in rate cuts worth 46 basis points (bps) from the Fed by the end of 2024, with the first cut expected in September or November, according to LSEG’s rate probability app. Gold price (XAU/USD) has retested the ceiling of a mini-range at around $2,326, and retreated. It is currently finding support at around the 50 Simple Moving Average (SMA) at the 4-hour chart at $2,317.