Gold prices surged on Wednesday for the second consecutive day as speculation grew that the Federal Reserve might cut interest rates in September. This move caused US Treasury bond yields and the US Dollar Index to fall, providing a positive boost for the precious metal. The XAU/USD pair traded at $2,372, increasing by over 0.30%.
The decline in US Treasury bond yields and a weakened US Dollar supported gold, which is seen as a safe-haven asset in times of economic uncertainty. Fed Chair Jerome Powell’s remarks before the US House of Representatives reiterated the possibility of rate cuts but expressed doubts about its impact on inflation reaching the 2% target. With inflows into Gold exchange-traded funds (EFTs) persisting in June, gold remains supported despite pullbacks.
Investors are now focusing on the release of US June inflation data, along with other key economic indicators like Initial Jobless Claims and the University of Michigan Consumer Sentiment data, to gauge the future direction of gold prices. The ongoing expectation of a Fed rate cut in September, as indicated by the odds priced in by investors, continues to drive market sentiment towards gold as a preferred investment option in the current economic climate.
