The Gold price (XAU/USD) shows renewed upward movement on Tuesday, rebounding from a recent three-week low near the $2,017-2,016, spot prices, range recorded the previous day. The increase in US Consumer Inflation Expectations reduces expectations that the Federal Reserve (Fed) might consider interest rate cuts later March.
This development is perceived as a supportive factor for the non-yielding precious metal. However, the intraday rise lacks strong bullish conviction. Additionally, the generally positive sentiment in Asian equity markets acts as a deterrent for aggressive buying in the safe-haven XAU/USD. Investors appear cautious, opting to wait for the latest US consumer inflation data on Thursday Jan 11, 2024 to gauge the Fed’s future policy decisions before determining the short-term direction.
The positive US monthly employment data released last Friday indicated a robust labor market and fostered optimism for a gradual economic slowdown. This, coupled with recent hawkish comments from multiple Federal Reserve officials, introduces uncertainty regarding the likelihood of an early interest rate cut by the US central bank. As a result, the yield on the 10-year US government bond remains above 4.0%, providing support to the US Dollar (USD) and limiting the upside for the Gold price.
Also, Gold climbed to approximately $2,035 per ounce, future prices, on Tuesday, recovering some losses from the previous session amidst a general weakening of the dollar. Investors are eagerly anticipating crucial US inflation data this week, which could provide insights into the Federal Reserve’s upcoming policy decisions. The New York Fed’s recent Survey of Consumer Expectations revealed a decline in short-term inflation forecasts among US consumers, reaching the lowest level in almost three years for December. Additionally, last week’s data indicated a stronger-than-expected job growth of 216,000 in December, showcasing the resilience of the labor market despite tighter financial conditions. Market expectations for a Fed rate cut in March have decreased to around 60%, down from nearly 90% a week ago.