Gold Price Gains As Us Yields Slumps Amid Firm Fed Rate-Cut Bets -

Gold Price Gains As Us Yields Slumps Amid Firm Fed Rate-Cut Bets

Jul 23, 2024Jeremy ParkinsonFinance0

Gold price (XAU/USD) gains ground near the round-level resistance of $2,400 in Tuesday’s North American session. The precious metal finds cushion as US bond yields slumps amid firm speculation that the Federal Reserve (Fed) will begin lowering its key borrowing rates from September. 10-year US Treasury yields tumble to near 4.23%. Higher yields on interest-bearing assets reduce the opportunity cost of holding an investment in non-yielding assets, such as Gold. Earlier, the Gold price was under pressure amid expectations that Donald Trump could emerge victorious in the United States (US) presidential elections in November. The expectations for Donald Trump gaining a second term rose after an assassination attack on him and US President Joe Biden’s withdrawal of his re-election bid from the White House. However, US Vice President Kamala Harris has been chosen as the nominee of Democrats. Growing speculation for Trump 2.0 has prompted upside risks to consumer inflation expectations. In a note on Monday, Australian investment bank Macquarie said, “Trump 2.0 will be a more inflationary policy regime, given restricted immigration, higher tariffs, and the extension of the Tax Cut and Jobs Act of 2025.” The scenario is favorable for the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, jumps to near 104.50. Daily digest market movers: Gold price in India weakens on custom duty reduction to 6% from 10%

Gold price rebounds above the crucial resistance of $2,400. However, the near-term outlook of the Gold price is still uncertain as investors await a slew of US economic data, which will be published this week.

Investors will focus on the preliminary US S&P Global PMI for July, Q2 Gross Domestic Product (GDP), and Durable Goods Orders and Personal Consumption Expenditures Price Index (PCE) data for June, which will provide fresh cues about when the US Federal Reserve (Fed) will start reducing interest rates.

The Manufacturing PMI is estimated to have expanded at a meager pace to 51.7 from June’s reading of 51.6. The Services PMI, a measure of activities in the service sector, is estimated to have expanded at a slower pace of 54.4 from the prior release of 55.3.

The major trigger will be the Fed’s preferred inflation gauge, the PCE index, which will indicate whether price pressures remain on track to return to the desired rate of 2%. The confidence of Fed officials that inflation has returned to the path of 2% grew after recent inflation readings showed that price pressures rose at a slower-than-expected pace in June.

According to the CME FedWatch tool, 30-day Federal Fund futures show the central bank beginning to lower its key borrowing rates from their current levels in the September meeting. The Fed is also expected to cut interest rates again in November or December.

In the Indian region, Multi Commodity Exchange (MCX) Gold price nosedives below Rs. 69,000 after Prime Minister Narendra Modi-led-NDA reduces basic custom duty on precious metals to 6% from 10% in the Fiscal Budget 2024-2025. The decision is expected to boost demand for physical gold.

Technical Analysis: Gold price aims to stabilize above $2,400 Gold price recaptures the crucial figure of $2,400. The precious metal finds cushion near the 20-day Exponential Moving Average (EMA), which trades around $2,390, suggesting that the near-term outlook has not weakened yet technically. The advancing trendline plotted from the February 14 low at $1,984.30 will be a major support for Gold bulls. The 14-day Relative Strength Index (RSI) drops inside the 40.00-60.00 range, suggesting that the upside momentum has stalled. However, the upside bias remains intact.A fresh upside would appear if the Gold price breaks above all-time highs above $2,480.More By This Author:USD/JPY Slides Further To 156.00 On Firm BoJ Rate-hike Bets WTI Plummets As Surprise PBoC Rate Cuts Raise Uncertainty Over China’s Economic Outlook AUD/USD Slumps To Near 0.6660 On Cautious Market Sentiment