GOLD HITS NEW YEARLY HIGH AS US YIELDS DROP ON MIXED US MANUFACTURING DATA

• Gold price catapults to $2,088.33, marking a significant rally in response to US economic reports and bond yield dynamics.
• Mixed manufacturing PMI reports fuel Gold's ascent with ISM data indicating contraction in US manufacturing sector.
• Declining US Treasury yields bolster Gold's attractiveness, pushing XAU/USD to new year-to-date peak.

Gold price soars to a new year-to-date high of $2,088.33 in Friday’s North American session, following the release of mixed economic data, as S&P Global revealed the economy in the United States is expanding. On the other hand, the Institute for Supply Management (ISM) reported that manufacturing activity is contracting, overshadowing the first report. The XAU/USD exchanges hands at $2,084.89, up more than 2.3%.

On Friday, S&P Global revealed that manufacturing conditions improved at the fastest pace since July 2022. The Manufacturing PMI for February was 52.2, up from 50.7. Chris Williamson, Chief Business Economist at S&P Global, said, “Manufacturing is showing encouraging signs of pulling out of the malaise that has dogged the goods-producing sector over much of the past two years.”

Later, the ISM February Manufacturing PMI came to 47.8, down from 49.1. Timothy Fiore, Chair of the Institute for Supply Management, noted, “The U.S. manufacturing sector continued to contract (and at a faster rate compared to January), with demand slowing, output easing and inputs remaining accommodative.”

The data sponsored a leg up in Gold prices after US Treasury bond yields plunged on expectations that rate cuts could arrive sooner than expected.

That said, XAU/USD prices embarked on an aggressive rally, hitting a new YTD high of $2,087.45 as US Treasury bond yields tumbled. The US 10-year Treasury bond yield dropped five and a half basis points (bps) to 4.197%, while real yields measured by 10-year Treasury Inflation-Protected Securities (TIPS) yield, falling from 1.934% to 1.878%. All of this weighed on the US Dollar (USD).