Gold prices experienced a significant decline on Friday as the US Dollar staged a recovery despite falling Treasury yields. The precious metal has been under pressure as traders reassess the impact of recent political events and potential economic shifts.
The recent surge in the US Dollar has eroded the appeal of gold as a safe-haven asset. This comes despite a decline in US Treasury yields, which typically support gold prices
Focus on US Inflation
Market participants are closely watching upcoming US inflation data for clues on the Federal Reserve’s monetary policy path. Any indication of persistent inflationary pressures could further bolster the US Dollar and weigh on gold prices.
Fed’s Cautious Stance
The Federal Reserve’s decision to reduce interest rates while maintaining a cautious stance on future monetary policy has added to the uncertainty surrounding gold’s outlook. While the Fed acknowledged a strong economy and cooling labor market, it also noted that inflation remains elevated.
Technical Outlook for Gold
The recent price action suggests that gold prices may be vulnerable to further downside. If the precious metal fails to regain momentum and break above key resistance levels, it could test lower support levels.
As investors navigate these uncertain market conditions, it’s crucial to stay updated on the latest economic developments and monitor the evolving geopolitical landscape.
