Gold price fluctuates amid rising US Treasury yields

Gold prices earlier on Monday fell to $2026.93 an ounce as a result of pressure from the recent increase in Treasury yields. With conflicting expectations for a possible quantitative easing in June, while market sentiment is still erratic.

Gold’s price is restrained since the US 10-year Treasury yield is moving around its year-to-date highs. As of this writing, the XAU/USD pair is trading at $2033.21 per ounce, down from its peak of $2,037.07. Interest rate speculators priced in a rate decrease by the Federal Reserve in March and May; as of now, June odds for a quarter of a percentage point reduction in rates are 50%.

Unexpectedly, US new home sales increased by 1.5% from 0.651 million to 0.661 million. In February, the Dallas Fed Manufacturing Index dropped to -11.3, indicating a rebound in economic activity. The Federal Open Market Committee (FOMC) minutes from January show that while inflation indices have recently increased, policymakers are hesitant to lower interest rates. Although it recognises that economic risks are biassed towards a downturn, the Fed plans to maintain its “highly attentive” stance towards inflation.

According to the most recent Initial Jobless Claims data, fewer Americans are filing for unemployment benefits, indicating that the US labour market is still robust. Although the manufacturing index unexpectedly surged and left contractionary territory, the services and composite indices grew less than the reading from the previous month. A total of 85 basis points of easing are factored in by investors for 2024.

At 103.765, the US Dollar Index is down 0.19% as of right now. The Federal Reserve is expected to lower interest rates later this year, according to New York Fed President John Williams, even if inflation’s rise towards the bank’s 2% target has been “bumpy.” Gold has passed the 50-day Simple Moving Average (SMA) and is now biassed neutrally upward.