Gold Prices Rise As Bond Yields Weaken; Focus Shifts To US Inflation Report.

(CTN News) – Gold prices rose on Monday, benefiting from a decline in bond yields as investors eagerly await US inflation data later this week.

This data is expected to provide more clarity on the Federal Reserve’s stance on interest rates following their recent shift towards a more accommodative approach.

As of 0312 GMT, spot gold was up 0.3% at $2,023.29 per ounce. Meanwhile, US gold futures saw a slight increase of 0.1% to $2,037.10. Tim Waterer, the chief market analyst at KCM Trade, noted that the decline in yields has contributed to the upward movement in gold prices.

The benchmark US 10-year Treasury yields are currently near their lowest level since July. Lower bond yields make holding non-interest-bearing gold more attractive by reducing the opportunity cost.

Last week, the Federal Reserve decided to keep interest rates unchanged and indicated that the era of tightening monetary policy, which lasted for the past two years, has come to an end. They also hinted at the possibility of lower borrowing costs in 2024.

However, New York Fed President John Williams has expressed his disagreement with the growing market expectations of rate cuts. He stated that the Fed is not currently discussing rate cuts and it would be premature to speculate about them.

According to the CME FedWatch tool, markets are currently pricing in a 70% chance of a Fed rate cut in March.

Traders are eagerly awaiting several US economic data releases this week, including the November core personal consumption expenditure (PCE) index report on Friday.

Analysts predict that the core PCE will have risen by 0.2% last month, with the annual inflation rate slowing to its lowest level since mid-2021 at 3.4%.

If the US macro data this week turns out to be weaker, it could support the argument that the Fed may be more aggressive with rate cuts next year.

This could lead to a decrease in the value of the dollar and bond yields, which would be favorable for the price of gold, as stated by Waterer.

In the precious metals market, spot silver saw a 0.3% increase to $23.89 per ounce, while platinum rose by 0.2% to $941.52 and palladium slipped by 1.6% to $1,154.96.

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