Gold prices (XAU/USD) have surged to a two-week high, reaching approximately $1877.21 on the back of declining US Treasury bond yields, which were influenced by the recently released Federal Reserve meeting minutes. As the Asian session begins, XAU/USD is trading at 1874.73, almost flat from the previous close.
Gold’s journey unfolds amidst the backdrop of the Fed’s minutes, inflation data, and official statements, all contributing to the metal’s upward momentum. The retreat of the US Dollar Index from its 11-month highs reached last week has provided further support to gold prices. Moreover, benchmark yields for the US 10-year Treasury note have pulled back from their highest levels since 2007, reinforcing gold’s rise.
The Federal Reserve’s minutes from its September monetary policy meeting revealed a nuanced perspective. Participants acknowledged the presence of both upside risks to inflation and downside risks to economic activity, highlighting the complexity of achieving the Fed’s objectives. Policymakers also emphasized the necessity of shifting decisions and communications toward a longer-term horizon as policy approaches its peak, indicating a commitment to maintaining rates at elevated levels for an extended period.
The US Department of Labor (DoL) reported that producer-side inflation figures exceeded expectations, with most figures surpassing those from August. However, the monthly reading for the Producer Price Index (PPI) expanded at a slower rate than in the previous month, suggesting that inflation concerns persist. Factors such as high energy prices and the recent automobile union strike may be contributing to this.
Recent statements from Fed officials have reflected a more neutral stance, with the exception of Fed Governor Michelle Bowman, who has stressed the necessity of further tightening to address inflationary pressures. This diversity of perspectives within the Federal Reserve adds an element of uncertainty to the trajectory of US monetary policy and continues to influence the trajectory of gold prices.