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Gold Prices Stable As US Dollar Rise Offsets Yield Decline.

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Gold Prices Stable As US Dollar Rise Offsets Yield Decline.

(CTN News) – On Tuesday, gold prices remained subdued due to a slight increase in the dollar, which offset the support from falling Treasury yields.

Investors are eagerly awaiting U.S. economic data scheduled for release this week, as it could provide further clarity on the Federal Reserve’s interest rate trajectory.

The price of spot gold remained unchanged at $2,026.30 per ounce, while U.S. gold futures also remained flat at $2,041.20.

Peter Fertig, an analyst at Quantitative Commodity Research, noted that the market became overly optimistic following the FOMC meeting, anticipating significant rate cuts next year.

However, some members of the Federal Reserve are not yet ready to make such moves and still believe that the risk of inflation has not been completely overcome.

Federal Reserve Chair Jerome Powell recently stated that the central bank’s monetary policy tightening is likely coming to an end, with discussions on reducing borrowing costs now on the horizon.

Despite some Fed officials pushing back against the market’s expectations of rate cuts, these remarks have had little impact on investor sentiment. According to the CME FedWatch tool, markets are still pricing in a 70% chance of a rate cut in March.

Fertig also highlighted that the decline in government bond yields is supporting gold prices by reducing the opportunity costs associated with holding the precious metal.

Investors are eagerly anticipating a range of U.S. economic data scheduled for release this week. Among the key reports is the November core personal consumption expenditure index, which serves as the Federal Reserve’s favored gauge of underlying inflation.

This report is due to be published on Friday, and its findings will be closely scrutinized by market participants.

In a separate development, the Bank of Japan has decided to maintain its ultra-loose monetary policy settings, as anticipated.

This decision underscores policymakers’ cautious approach, as they await further indications on whether wages will increase sufficiently to sustain inflation around the desired 2% target.

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