Gold bounces back amid weak US Dollar, falling US yields
Gold prices recover on Wednesday after dropping to a weekly low of $2,605, bolstered by a soft US Dollar responding to the release of US economic data. This alongside falling US Treasury bond yields, spurred Gold’s recovery to current prices. The XAU/USD trades at $2,636 up by 0.13%.
The market mood turned slightly sour as US equity markets prepared for Thanksgiving. In the meantime, the Federal Reserve’s (Fed) preferred inflation gauge, the core Personal Consumption Expenditures (PCE) Price Index, justifies the Fed's gradual approach, which is expected to lower borrowing costs at the December meeting.
Other data showed that the economy remains robust after the release of the second estimate of the third quarter's Gross Domestic Product (GDP). At the same time, jobs data revealed that the labor market remains strong as the number of Americans applying for unemployment benefits dipped below estimates.
Following the data, US Treasury bond yields fell, dragging the Greenback lower. The US Dollar Index (DXY), which tracks the performance of six currencies against the buck, tumbled 0.78% to 106.04.
Bullion prices recovered despite Lebanon and Israel agreeing on a ceasefire. Nevertheless, the escalation of the Russia-Ukraine conflict could keep buyers leaning into the non-yielding metal, which posted weekly losses of over 2.90% despite advancing on Wednesday.
According to CME FedWatch Tool data, markets now see a 70% chance of a quarter-point rate cut in December. The non-yielding metal shines in lower interest rate environments.
Source: Fxstreet
