Gold price has been gaining positive traction for the sixth consecutive day and has reached its multi-month high. This is due to dovish Fed expectations, falling US bond yields, and a bearish USD providing support. Caution is advised due to the overbought RSI on the daily chart.
Gold price (XAU/USD) reached a near seven-month high of around $2,052 on Wednesday, although it has slightly decreased heading into the European session. Despite a modest recovery in the US Dollar, the precious metal has remained in positive territory for five consecutive days and seems likely to continue appreciating due to expectations of the Fed not raising interest rates.
Fed Governor Christopher Waller’s less hawkish remarks on Tuesday have reaffirmed the market’s predictions that the US central bank might begin easing its monetary policy as early as March 2024. Additionally, the underwhelming US bond auction has led to a decrease in the yield on the benchmark 10-year US government bond, which should limit USD recovery and continue to support the Gold price.
Traders are advised to be cautious ahead of key macro data releases from the US, including the prelim US GDP report and the US inflation data on Thursday, which are expected to impact the Fed’s policy outlook and provide further momentum for Gold.
In addition, the US Dollar has weakened against major currencies this month, with the biggest change against the New Zealand Dollar. Interest rates influence Gold price, as higher interest rates generally weigh on Gold’s price due to the increased opportunity cost of holding Gold.
