Market Drivers; US Session

Gold prices rallied during the mid-North American session on Wednesday, bolstered by a decline in US Treasury yields and a disregard for recent US Dollar strength. Anticipations of interest rate cuts by major central banks, fueled by soft inflation data, weighed on bond yields and propelled the non-yielding metal. As of writing, XAU/USD is trading at $2,674, up by 0.46%.

Market sentiment has exhibited a recent uptick, evident in the green performance of three out of four US equity indices. The continued fall in US Treasury bond yields has further supported Bullion prices, reaching a year-to-date (YTD) high of $2,685. However, a lack of momentum has prevented prices from breaching the $2,700 mark.

Dollar Strengthens Amid Risk-Off Sentiment

The Dollar Index (DXY) climbed to multi-week highs above 103.50, propelled by a risk-off market environment. Retail Sales, along with the Philly Fed Manufacturing Index, weekly Initial Jobless Claims, Industrial and Manufacturing Production, Business Inventories, the NAHB Housing Market Index, and the EIA’s weekly report, will be key economic indicators to watch.

Euro Weakens Against Dollar

EUR/USD extended its multi-day decline, breaking below the 1.0900 support level. The ECB’s interest rate decision and President Christine Lagarde’s press conference will be closely watched. Additional data, including Balance of Trade results, the final Inflation Rate, and a speech by ECB’s McCaul, will also be relevant.

Pound Falls Following Lower UK Inflation

GBP/USD dropped significantly, breaching the crucial 1.3000 support level in response to lower UK inflation data. A speech by the BoE’s Wood is scheduled.

Yen Remains Choppy

USD/JPY remained volatile, trading below the 150.00 barrier. The pair gained modestly on Wednesday following the Dollar’s strength and dovish comments from the BoJ’s Adachi. Balance of Trade results and the Tertiary Industry Index will be released.

Australian Dollar Retreats

AUD/USD retreated to multi-week lows after breaking below the key 0.6700 support level, focusing on the 200-day SMA. The Australian labor market report will be a crucial event.