Gold Prices Rise Amid Lower US Yields and Shift in Market Expectations
Gold prices rose modestly on Thursday, gaining over 0.40% after US Treasury yields dropped following Wednesday's inflation data. The Federal Reserve's preferred inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index, came in at 3.4% YoY, below forecasts of a 3.3% jump.
As a result, money markets have shifted, with traders now expecting a near 70% chance of an interest rate hold and a 83% chance of a December rate hike. However, the US Dollar Index (DXY) remains strong, up 0.61% at 102.08.
Despite the hawkish sentiment from some Fed officials, including Minneapolis Fed President Neel Kashkari, who called for additional hikes, the overall market expectation is that the Fed will take a more cautious approach. The US 10-year Treasury yield has dropped over 4 basis points to 5.243%.
The rise in Gold prices is attributed to the decline in yields and the subsequent decrease in the value of the US Dollar. However, traders should expect further downside in Gold as the market continues to assess the Fed's next move.