Gold prices fall amid stronger dollar, rising Treasury yields
Date
5/29/2024 5:25:22 AM
(MENAFN) On Wednesday, Gold prices experienced a slight dip as the dollar strengthened and Treasury yields climbed, setting the stage for a key inflation report that could shed light on the trajectory of US interest rates. In early transactions, gold saw a decrease of 0.2 percent, settling at USD2,356.92 per ounce by 03.34 GMT. Despite having reached a historic peak of USD2,449.89 on May 20, prices took a slight downturn.
In the United States, gold futures managed a modest increase of 0.1 percent, reaching USD2,357.80. The ascent of the dollar by 0.1 percent contributed to making gold comparatively less appealing to holders of alternative currencies. Concurrently, benchmark ten-year US bond yields surged to levels unseen in several weeks, further influencing market dynamics.
Soni Kumari, a commodity strategist at ANZ, remarked on the situation, noting that investors seemed inclined to capitalize on profits, particularly as prices hovered near the USD2,350 mark. Kumari characterized the recent market movement not as a corrective measure, but rather as a healthy period of consolidation following a notably sharp surge the previous Monday.
Anticipation loomed regarding the impending release of core personal consumption expenditures index data in the United States, slated for Friday. This metric, favored by the Federal Reserve as a gauge of inflation, carried implications for gold's trajectory, according to Tim Waterer, chief market analyst at KCM Trade. Waterer suggested that the data release might pave the way for gold to reclaim the USD2,400 threshold, particularly given its potential influence on the timing of interest rate adjustments.
Presently, traders appear to be pricing in a roughly 57 percent probability of a rate cut by November, as indicated by CME's Fed Watch service. This expectation further underscores the intricate interplay between economic indicators and market sentiment, shaping the trajectory of gold prices in the near term.
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