Tuesday, October 29, 2024

Gold price forecast: XAU/USD rises to two-week high, fuelled by falling US bond yields after FOMC minutes

Gold rises to a two-week high of $1877.21, supported by falling US Treasury yields.

Fed minutes reveal concerns about dual risks to inflation and economic activity, influencing policy outlook.

US producer inflation data and divergent Fed policy stances complicate gold’s path.

The price of gold (XAU/USD) rose for the second day in a row, hitting a two-week high of around $1877.21 on Wednesday, as US Treasury yields fell on the back of the latest Fed minutes. At the time of writing, the XAU/USD is trading at 1874.73, almost unchanged at the start of the Asian session.

Meanwhile, the US Dollar Index continued to retreat from last week’s 11-month highs, providing a tailwind for the XAU/USD. In addition, the benchmark 10-year US Treasury yield retreated from its highest level since 2007. These factors contributed to the rise in gold prices.

The US Federal Reserve recently released the minutes of its September monetary policy meeting. According to these minutes, participants acknowledged both upside risks to inflation and downside risks to economic activity. This suggests a two-sided challenge in achieving the Fed’s objectives. Policymakers also noted that as policy was nearing its peak, decisions and communications should begin to shift to a longer horizon of higher rates for an extended period.

In other news, the US Department of Labor (DoL) reported that producer price inflation figures were better than expected, with most of the readings higher than in August. However, the monthly reading for the Producer Price Index (PPI) rose less than the previous month, suggesting that inflation remains a concern, possibly influenced by high energy prices and the auto union strike.

In terms of recent statements from Fed officials, many have taken a more neutral stance, with the exception of Fed Governor Michelle Bowman, who emphasised the need for further tightening to address inflationary pressures.

Alice
Alice
Alice is a seasoned jewelry designer renowned for her exquisite creations that seamlessly blend artistry with elegance. With a passion for craftsmanship and an unwavering commitment to quality, Alice has established herself as a distinguished figure in the world of fine jewelry. Drawing inspiration from diverse cultures and artistic movements, Alice brings a unique perspective to her designs, creating pieces that transcend mere accessories to become timeless works of art. Her meticulous attention to detail and insistence on using only the finest materials ensure that each creation reflects not only her artistic vision but also a commitment to unparalleled craftsmanship. Having honed her skills through years of dedicated practice and a keen understanding of evolving trends, Alice is adept at translating her clients' desires into bespoke, one-of-a-kind pieces. Her portfolio encompasses a range of styles, from classic and timeless to avant-garde and contemporary, showcasing her versatility and ability to cater to a diverse clientele.

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