Gold surged on Wednesday, recovering from a weekly low of $2,605, as a softer U.S. Dollar and declining Treasury yields supported the metal. The XAU/USD pair climbed 0.13% to $2,636, buoyed by the release of key U.S. economic data that indicated resilience in the economy, including strong labor market figures and the second estimate of Q3 GDP.
The core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge, met expectations but continued to rise, reinforcing the Fed’s cautious stance. Market sentiment remained subdued ahead of Thanksgiving, with investors anticipating a potential rate cut in December.
Gold’s Appeal Strengthens Amid Economic Signals
Falling U.S. Treasury yields contributed to Gold’s rebound as the 10-year real yield dipped to 1.966%. The U.S. Dollar Index (DXY) dropped by 0.78% to 106.04, further enhancing Gold’s attractiveness.
Despite geopolitical tensions easing with a ceasefire between Lebanon and Israel, ongoing risks from the Russia-Ukraine conflict continue to support demand for safe-haven assets like Gold. The non-yielding metal often thrives in environments of lower interest rates, and market participants now see a 70% probability of a quarter-point rate cut in December, according to CME FedWatch Tool data.
Gold Outlook Remains Positive
The combination of soft U.S. economic data and expectations of Fed easing bodes well for Gold in the near term. Durable Goods Orders rose by 0.2% in October, missing forecasts but improving from September’s decline, while jobless claims stayed below expectations. Core PCE inflation edged up to 2.8% year-over-year in October, maintaining upward pressure on inflation concerns.
As investors digest these developments, Gold remains well-positioned to benefit from a weakening Dollar and falling yields, solidifying its status as a reliable hedge against economic uncertainty.
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