Gold Climbs prices rose in European trade on Tuesday, resuming gains after a brief hiatus, as US 10-year treasury yields slowed down. Investors are eagerly awaiting crucial US inflation data and a speech by Federal Reserve Chair Jerome Powell for fresh clues on potential interest rate cuts this year.
Prices
Gold prices rose by 0.4% today, reaching $2345.99 an ounce, with a session-low at $2334. This increase follows a significant loss of over 1% on Monday, which marked the first decline in three days
pulling away from a two-week high of $2378 reached on Friday.
US 10-Year Treasury Yields
US 10-year treasury yields fell by 0.4 basis points on Tuesday, marking the second consecutive loss. Lower yields generally support non-yielding assets like gold, as they reduce the opportunity cost of holding such assets.
Upcoming US Inflation Data
The market is keenly anticipating US inflation data for April
which includes producer prices data set to be released later today and consumer prices data scheduled for tomorrow. These data points are critical for gauging the likely path of future monetary policies.
US Interest Rate Expectations
Currently, the markets are pricing in a 3.5% chance of a June Fed rate cut, a 25% chance of a July cut
and a 63% chance of a September cut. According to the Fedwatch tool, investors expect two Fed interest rate cuts this year, likely in September and November.
Jerome Powell’s Speech
Fed Chair Jerome Powell is expected to speak in Amsterdam later today
where he will address audience questions on the future of inflation and interest rates. His comments could provide crucial insights into the Fed’s thinking and influence market expectations.
SPDR Gold Trust
Gold holdings at the SPDR Gold Trust remained flat yesterday at 831.93 tonnes, maintaining a week-high level. This stability in holdings suggests that investor interest in gold remains strong amid ongoing economic uncertainties.
Conclusion
As gold prices climb ahead of crucial economic data and Powell’s anticipated speech
the market remains attentive to the developments that could influence the Federal Reserve’s policy decisions. The precious metal’s performance in the coming days will likely hinge on the outcomes of these key events and their implications for future interest rates.
FAQs
Q1: Why did gold prices rise today? A1: Gold prices rose today due to a slowdown in US 10-year treasury yields and anticipation of crucial US inflation data and Fed Chair Jerome Powell’s speech
which may provide new insights into future interest rate cuts.
Q2: What is the significance of US 10-year treasury yields falling? A2: Falling US 10-year treasury yields reduce the opportunity cost of holding non-yielding assets like Gold Climbs making them more attractive to investors.
Q3: What are the markets expecting regarding US interest rate cuts? A3: The markets are currently pricing in a small chance of a June rate cut, a moderate chance of a July cut
and a high chance of a September cut
with expectations of two rate cuts overall this year.
Q4: What will Jerome Powell discuss in his speech? A4: Fed Chair Jerome Powell is expected to discuss the future of inflation and interest rates in his speech in Amsterdam
which could provide important clues for the market.
Q5: How are gold holdings at the SPDR Gold Trust faring? A5: Gold Climbs holdings at the SPDR Gold Trust remained flat at 831.93 tonnes
indicating stable investor interest amid economic uncertainties.