In a refreshing turn, gold prices (XAU/USD) rebound as the Greenback faces pressure from lower US Treasury yields during the early Asian trading hours on Tuesday. The precious metal is currently holding steady around $1,980, marking a 0.11% gain on the day and breaking a two-day losing streak.
The decline in the US dollar Index (DXY) to 103.44, its lowest level since late August, contributes to gold’s positive momentum. Concurrently, US Treasury bond yields are consolidating losses, with the 10-year yields hovering around 4.42%.
On a relatively quiet day in terms of US economic data, all eyes turn to the Federal Open Market Committee (FOMC) Meeting Minutes scheduled for Tuesday. Analysts and traders eagerly anticipate insights into future policy rate directions and potential improvements in inflation. The consensus among investors suggests that the US Federal Reserve (Fed) may be concluding its interest rate hike cycle, paving the way for potential rate cuts around mid-2024.
The sentiment that the central bank might cut rates in the coming months exerts downward pressure on the Greenback, providing further support to the USD-denominated gold. Market indicators, such as CME’s FedWatch Tool, reveal a 50% probability of a cut of at least 25 basis points by May 2024.
Gold traders are keenly awaiting the FOMC Meeting Minutes for fresh market impetus. Additionally, attention is directed towards upcoming events, including the US Existing Home Sales and the Chicago Fed National Activity Index on Tuesday. These economic indicators are expected to offer further clarity and direction for gold prices as the day unfolds.