Gold Price Holds Below 2000 Amidst Dollar and Rate Hike Uncert
The price of gold (XAU/USD) is currently holding steady just below the $2,000 psychological mark as the Asian trading session kicks off on Monday. Gold is seeing some support due to a correction in the US Dollar (USD) and a slight pullback in US Treasury bond yields. As of now, the price of gold is hovering around $1,996, showing a modest gain of 0.07% for the day.
Simultaneously, the US Dollar Index (DXY), which measures the USD's value against a basket of global currencies, has slipped to 106.20 after pulling back from its weekly high of 106.70. In the bond market, the 10-year Treasury bond yield has made small movements and is currently around 4.90%.
Last week, Federal Reserve (Fed) Chair Jerome Powell reiterated that the Fed intends to keep interest rates steady at its upcoming meeting on Wednesday. However, Powell hinted that the decision for December would depend on incoming economic data. He mentioned that if there's continued strong economic growth and a labor shortage, an additional rate hike is a possibility. This potential for higher interest rates could limit the upward potential for gold. It's important to note that rising interest rates make it less attractive to invest in assets like gold, which don't provide any yield.
Additionally, investors are keeping an eye on the Chinese Purchasing Managers' Index (PMI) data, set to be released on Tuesday. China's Manufacturing PMI is expected to remain in expansionary territory, with an estimated growth to 50.2, while the Non-Manufacturing PMI is anticipated to rise to 51.8. Positive surprises in this data could boost the price of gold, as China is both the largest gold producer and consumer in the world.
Looking ahead to Tuesday, there are key economic indicators to watch in the US, including the Housing Price Index and Consumer Confidence. However, the primary focus will shift to the Federal Reserve's interest rate decision and the subsequent press conference on Wednesday. Traders will closely monitor these events for cues and potential trading opportunities, particularly in the USD/JPY currency pair.
Simultaneously, the US Dollar Index (DXY), which measures the USD's value against a basket of global currencies, has slipped to 106.20 after pulling back from its weekly high of 106.70. In the bond market, the 10-year Treasury bond yield has made small movements and is currently around 4.90%.
Last week, Federal Reserve (Fed) Chair Jerome Powell reiterated that the Fed intends to keep interest rates steady at its upcoming meeting on Wednesday. However, Powell hinted that the decision for December would depend on incoming economic data. He mentioned that if there's continued strong economic growth and a labor shortage, an additional rate hike is a possibility. This potential for higher interest rates could limit the upward potential for gold. It's important to note that rising interest rates make it less attractive to invest in assets like gold, which don't provide any yield.
Additionally, investors are keeping an eye on the Chinese Purchasing Managers' Index (PMI) data, set to be released on Tuesday. China's Manufacturing PMI is expected to remain in expansionary territory, with an estimated growth to 50.2, while the Non-Manufacturing PMI is anticipated to rise to 51.8. Positive surprises in this data could boost the price of gold, as China is both the largest gold producer and consumer in the world.
Looking ahead to Tuesday, there are key economic indicators to watch in the US, including the Housing Price Index and Consumer Confidence. However, the primary focus will shift to the Federal Reserve's interest rate decision and the subsequent press conference on Wednesday. Traders will closely monitor these events for cues and potential trading opportunities, particularly in the USD/JPY currency pair.
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