Gold surges on falling T-yields ahead of FOMC decision

Gold price surges as falling US Treasury bond yields enhance the appeal of the non-interest-bearing asset. May PPI data from the US BLS comes below expectations, supporting the precious metal. The US dollar Index falls to a four-week low, expecting a rescue from a hawkish Jerome Powell. At the time of writing, XAU/USD is trading at 1956.86 after hitting a low of $194.29 per ounce.

The gold price climbs as the North American session progresses due to falling US Treasury bond yields, ahead of the US Federal Reserve Open Market Committee decision.

The falling US Treasury bond yields enhance the appeal of the non-interest-bearing asset. May PPI data from the US BLS comes below expectations, supporting the precious metal. The US dollar Index falls to a four-week low, expecting a rescue from a hawkish Jerome Powell.

US real yields, which influence XAU/USD prices, are under pressure. In the meantime, the US Dollar Index (DXY), which measures the buck’s value vs. a basket of six currencies, drops 0.54%, at 102.747, its lowest level in four weeks1.

Expectations for the upcoming meeting show that analysts expect Jerome Powell and Co. to keep rates unchanged. Consequently, US Treasury bond yields edge lower, led by the 10-year note yielding 3.786%, down four basis points (bps).