Gold price appreciates due to the high likelihood of a rate-cut decision by the Fed in September.
Fed Governor Christopher Waller stated that the central bank is ‘getting closer’ to an interest rate cut.
Gold may limit its upside as US Treasury yields rebound.
Gold price (XAU/USD) edges higher to near $2,470 per troy ounce on Thursday, remaining close to record highs amid growing optimism that the Federal Reserve (Fed) will reduce rates in September. Lower interest rates make non-yielding assets like Gold more attractive to investors.
Federal Reserve officials have expressed increasing confidence that the pace of price increases is now more consistently aligning with policymakers' goals. On Wednesday, Fed Governor Christopher Waller said that the US central bank is ‘getting closer’ to an interest rate cut. Meanwhile, Richmond Fed President Thomas Barkin stated that easing in inflation had begun to broaden and he would like to see it continue,” per Reuters.
According to CME Group’s FedWatch Tool, markets now indicate a 93.5% probability of a 25-basis point rate cut at the September Fed meeting, up from 69.7% a week earlier.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against the six other major currencies, rebounds due to improved US Treasury yields. The DXY trades around 103.80, with yields on 2-year and 10-year US Treasury bonds standing at 4.45% and 4.17%, respectively, at the time of writing. This scenario may limit the upside of the Gold prices.
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