GOLD PRICE RISES AS US YIELDS COOL DOWN, ALTHOUGH DOWNSIDE REMAINS FAVORED
- Gold price rebounds following a modest decline in US Treasury yields.
- The precious metal remains under pressure as Fed rate cut expectations for June wane.
- Stubborn US PPI data suggested inflation pressures persist.
Gold price (XAU/USD) moves higher in Friday’s European session as US bond yields cool slightly after a strong run-up on Thursday. Market expectations for the Federal Reserve (Fed) reducing interest rates in the June have diminished, suggesting that the slight recovery in the Gold price could merely be a pullback that could be used as a selling opportunity by investors.
The precious metal registered a sharp sell-off on Thursday on hotter-than-expected United States Producer Price Index (PPI) figures for February. Fed policymakers have brought down price pressures significantly but the last mile before the 2% target appears to be sticker than progress yet made. The prospect of high interest rates benefited the US Dollar (USD), weighing on the XAU/USD pair.
10-year US Treasury yields are slightly down to 4.28% on Friday, but easing expectations for the Fed announcing rate cuts in June have led them to a high of 4.30% this week from 4.03% previously. This has significantly increased the opportunity cost of holding investments in non-yielding assets such as Gold. Meanwhile, the US Dollar Index (DXY) refreshes a three-week high near 103.50.
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