Gold shines as US yields drop amid positive market mood

An obvious change in US bond yields, with the 10-year note coupon falling from a 16-year high of 4.51% to 4.44%, constitutes a key factor that causes gold prices to recover and gain 0.25%.

The Fed’s decisionmakers were eager to convey a cautious stance, highlighting the need for a big deal of patience despite the need for additional rate hikes to keep inflation under control in a battle that is still far from concluding.

The US data for the following week, including Consumer Confidence, Durable Goods Orders, and Initial Jobless Claims, will give more of the awaited direction. The US Dollar Index is currently showing small gains and is currently at 105.56, which may have an impact on the gold price rally.

After falling to a weekly low of $1913.99, the price of gold starts to rise again, but it is still unable to overcome strong resistance at $1929.79.

The change in US bond yields is pushing up gold prices. The interest rate on the benchmark US 10-year note reversed from a 16-year high of 4.51% to 4.44%. As a result, US real rates are sliding down from 2.11% to 2.06% by five basis points.

In the meanwhile, Fed officials had adopted a cautious stance, with Boston and San Francisco Fed Presidents Susan Collins and Mary Daly leading the charge. They emphasised that while inflation is slowing and more rate increases are likely to be necessary, the Fed must exercise patience. More rises, according to Fed Governor Michelle Bowman, are required to keep inflation under control.

S&P Global released the final PMI readings for the US in terms of data. Though it increased to 48.9, the manufacturing PMI was still in recessionary zone. While the Services and Composite PMI expanded and still aimed for the 50 expansion/contraction mark, it also showed signs of losing steam.

Gold’s advance is halted while the US Dollar Index records slight gains of 0.17%. The DXY is at 105.56 and is expected to post strong gains for the tenth consecutive week.

On the US front, Consumer Confidence, Durable Goods Orders, Initial Jobless Claims, and the Fed’s preferred gauge for inflation the core PCE.