The weakening of the US dollar and a dip in Treasury yields made gold prices climb above $2,000 on Thursday. Gold prices fell below the $2,000 mark this week anticipating the CPI data and the Fed’s interest rate decision. The CPI data published on Tuesday show inflation cooling down to 3.1%.
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However, investors remain cautious as the markets expect inflation to return to normalcy at 2% and below. Coming to the interest rate decision, the Feds have projected rate cuts at some point in 2024. The Federal Reserve kept interest rate cuts unchanged this time keeping it the same since the last three consecutive months.
Weak US Dollar & Dip in Treasury Yields Make Gold Prices Jump 1.5%
Gold prices came close to $2,040 on Thursday by rising 1.5% after the Feds paused the interest rate hike. The development added inverse effects on the US dollar and the Treasury yields causing both to dip this week and giving gold prices a boost in the charts. However, gold prices are now cooling down after the rally and are hovering near the $2.035 mark.
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The Treasury yields hit a 10-year low since August after the Feds held interest rates steady for three consecutive months. The 10-year Treasury yields dropped 19 basis points to 4.016% and the US dollar dipped briefly strengthening gold.
“The Fed’s acknowledgment of inflationary pressures continuing to come down has raised interest rate cut expectations, which is seeing a dramatic drop in yields and US dollar, and a subsequent rise in gold and silver,” said David Meger, director of metals trading at High Ridge Futures to CNBC.
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Read here to know a realistic price prediction on when gold is expected to rise 50% and reach $3,000 next. The markets are now favoring gold while the US dollar and Treasury yields remain in turbulent waters.