Gold price bulls retain control despite rebounding US bond yields, modest USD strength
Gold price (XAU/USD) builds on the previous day's modest gains and scales higher for the second successive day on Tuesday. The commodity maintains its bid tone through the early European session and currently trades around the $2,913 region, up over 0.50% for the day. Worries that US President Donald Trump's threatened reciprocal tariffs would trigger a global trade war continue to boost demand for the safe-haven bullion. Apart from this, bets that the Federal Reserve (Fed) would cut interest rates further lend additional support to the non-yielding yellow metal.
Meanwhile, the intraday uptick seems rather unaffected by a goodish pickup in the US Treasury bond yields and a modest US Dollar (USD) rebound from the lowest level since December 17, which tends to undermine the Gold price. Even the optimism over a delay in the implementation of US President Donald Trump's reciprocal tariffs and talks aimed at ending the Russia-Ukraine war do little to hinder the bullish sentiment. This suggests that the path of least resistance for the XAU/USD is to the upside and supports prospects for a further near-term appreciating move.
Gold attracts buyers for the second straight day amid concerns about a global trade war.
Bets that the Fed would cut rates further lend support to the non-yielding yellow metal.
Rebounding US bond yields and a modest USD uptick do little to cap the XAU/USD pair.
Gold price remains supported by trade war fears; shruggs of modest bounce in US bond yields and USD
US President Donald Trump threatened on Friday, saying that levies on automobiles would be coming as soon as April 2. This comes on top of Trump's reciprocal tariff plans on countries that charge duties on US imports and continues to underpin the safe-haven Gold price.
The disappointing release of US Retail Sales figures on Friday, along with mixed signals on inflation, suggests that the Federal Reserve could possibly cut rates at the September or October policy meeting. Fed Funds Futures see the possibility of a 40 basis point rate cut in 2025.
Philadelphia Fed President Patrick Harker said on Monday that the labor market is largely in balance and the current economy argues for a steady policy as inflation has been sticky over recent months. Future Fed rate policy choices will be data-driven, Harker added further.
Fed Board of Governors member Michelle Bowman noted that high asset prices may have impeded progress on inflation and more certainty is needed on declining inflation before reducing rates. Bowman added that wage growth above level is consistent with the Fed inflation target.
Fed Board of Governors member Christopher Waller said that inflation progress last year has been excruciatingly slow and that rate cuts would be appropriate in 2025 if inflation repeats the 2024 pattern. Waller expects disinflation and interest rate cuts to resume year on year.
The US Dollar attracts some buyers and for now, seems to have snapped a three-day losing streak to its lowest level since December 17. This might hold back traders from placing aggressive bullish bets around the XAU/USD and keep a lid on any further appreciating move.
Traders look to the release of the Empire State Manufacturing Index from the US for some impetus later during the North American session. Apart from this, speeches by influential FOMC members would drive the USD demand and produce short-term trading opportunities.
Source: Fxstreet
