Gold prices saw a decline on Friday as US Treasury yields surged, leading to a drop in the precious metal after it had reached a four-day high. The XAU/USD pair fell slightly to $2,324 as hopes for a future cut in interest rates by the Federal Reserve in 2024 emerged.
The US Personal Consumption Expenditures (PCE) Price Index report for May met expectations, signaling progress in the disinflationary process. This raised hopes for American consumers despite the increase in prices. Initially, Gold prices surged after the announcement but eventually retreated as US Treasury yields rose.
The US 10-year Treasury note yield climbed to 4.339%, the highest level since June 12. Despite this, the US Dollar Index (DXY) remained relatively stable at around 105.80, showing only a minor decline of 0.08%. Some Fed officials expressed caution regarding potential interest rate cuts, suggesting a slower pace of monetary policy adjustments.
Market data showed a slight improvement in American consumer sentiment compared to previous months. Fed officials indicated that inflation is expected to cool down and reach the Fed’s target by the end of 2025. Despite the uncertain outlook, Gold prices remain volatile, influenced by economic data and market sentiment.
The technical analysis revealed a bearish pattern in Gold prices, indicating the possibility of further declines. The Relative Strength Index (RSI) tilted bearish, suggesting that sellers might have the upper hand in the market. Key support and resistance levels were identified, with a potential downside target in the near term.
The Federal Reserve plays a vital role in shaping monetary policy in the US, with a focus on achieving price stability and full employment. Interest rate adjustments are the primary tool used by the Fed to control inflation and stimulate economic growth. The Fed’s decisions impact the US Dollar and international investor sentiment, influencing market dynamics.
In conclusion, the recent fluctuations in Gold prices reflect the impact of economic data and Fed policy on the financial markets. The uncertainty surrounding future interest rate cuts and inflation expectations continue to drive market volatility. Traders should closely monitor key support and resistance levels to navigate the changing landscape of the precious metals market.
