Gold prices climbed on Friday, crossing $3,350 per ounce, driven by a weaker US Dollar and dovish remarks from Federal Reserve Governor Christopher Waller. Traders reacted positively to signs that the Fed may cut interest rates in July, pushing the yellow metal higher as Treasury yields slipped.
At the time of writing, spot gold (XAU/USD) trades at $3,353, marking a 0.43% daily gain.
Dovish Fed Comments Spark Gold Rally
Speaking earlier on Friday, Fed Governor Waller expressed support for a rate cut at the upcoming policy meeting. His remarks caused US Treasury yields to fall, a bullish signal for gold, which tends to move inversely to yields.
This shift in tone prompted traders to raise their rate cut bets. Fed futures now price in 45 basis points of easing by year-end, up from 42 bps the day before.
Meanwhile, the US Dollar Index (DXY) dropped 0.13% to 98.48, making dollar-denominated bullion more attractive to global buyers.
Economic Sentiment Supports Bullion
Adding to the positive sentiment for gold, the University of Michigan’s preliminary July Consumer Sentiment Index rose from 60.7 to 61.8, surpassing expectations. The report also showed that long-term inflation expectations eased to 3.6% (down from 4%), and one-year expectations fell to 4.4%, below the previous month’s 5%.
Survey Director Joanne Hsu noted that consumer confidence is improving slightly but remains sensitive to inflation and trade policies.
Market Drivers Today
- Waller backs rate cut: Fed’s Christopher Waller stated he would support a rate cut in July, though he stopped short of confirming it ahead of time.
- Weaker US Dollar: DXY slips to 98.48, enhancing the appeal of gold internationally.
- Decline in Treasury yields: 10-year yield falls three basis points to 4.421%, boosting gold demand.
- Mixed US data: While CPI hovers near 3% and PPI eases, strong retail sales show higher prices tied to tariffs.
- Fed outlook: The market sees a 94% chance the Fed holds rates steady this month, with a 6% probability of a 25-bps cut.
Gold Technical Outlook: XAU/USD Eyes $3,400
Gold remains comfortably above the $3,350 level as the market heads into the weekend. If XAU/USD breaks above this week’s high of $3,377, it could test resistance at $3,400. A further rally would open the door to the June 16 high of $3,452 and the record high at $3,500.
On the downside, a drop below $3,300 may lead to a slide toward the June 30 low at $3,246, with further support at the 100-day SMA near $3,209.
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