• Gold price rebounds from $2,315 as US bond yields come under pressure on Monday.
• Investors see the Fed reducing interest rates twice this year.
• The US economic outlook improved as preliminary PMI expanded at a faster pace in June.

Gold price (XAU/USD) attracts bids near $2,315 in Monday’s European session as US bond yields edge down amid firm speculation that the Federal Reserve (Fed) will deliver two rate cuts this year. Expectations for the Fed to reduce interest rates twice in 2024 strengthened amid easing inflationary pressures in the United States (US). The 10-year US Treasury yields drop to near 4.25% on Monday.

The US Consumer Price Index (CPI) report showed that price pressures decelerated more than expected in May. Also, the preliminary S&P Global Purchasing Managers Indes (PMI) report for June showed signs of moderate cooling in cost growth. “Selling price inflation cooled to a five-month low in June. The rate of increase nevertheless fell to a five-month low in the services sector, where the rise was among the lowest seen over the past four years, and a six-month low in manufacturing,” the report said.

The CME FedWatch tool suggests that the central bank will start the policy-easing campaign at the September meeting and deliver subsequent rate cuts in November or December. The 30-day Federal Funds futures pricing data indicate that the probability of a rate cut in September is 66%.

On the contrary, according to the dot plot chart at the June FOMC economic projections, Fed policymakers expect that interest rates will be cut only once this year. Officials want to see inflation declining for months before pivoting to the policy-normalization process