Gold price eases intraday gains amid recovery in US Treasury yields

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Gold price (XAU/USD) dropped on Thursday after registering a fresh three-week high. The precious metal fell as profit-booking kicked-in after the sharp rally of the last two weeks. This came as the opportunity cost of owning the non-yielding metal rose amid US Treasury yields showing signs of recovery. The broader appeal for the Gold price, however, is expected to remain upbeat as investors see the Federal Reserve (Fed) reducing interest rates from March and with underlying inflation clearly now in a downward trajectory. The US Dollar is consistently facing a sell-off amid early rate cut expectations, helping to underpin the precious metal’s Dollar-denominated value.

Contrary to investors’ expectations, Fed policymakers see a high likelihood of a market reaction on rate-cut commentary from Federal Reserve Chairman Jerome Powell. Fed policymakers have been considering rate cut discussions as “premature” in the current scenario amid absence of confidence in inflation declining towards 2%. Meanwhile, the US Department of Labor has reported Initial Jobless Claims (IJC) for the week ending December 22. Individuals claimed jobless benefits rose to 218K against the cosnensus of 210K and the prior reading of 206K. Gold price fell gradually after printing a fresh three-week high near $2,090. The long-term appeal for the Gold price is still upbeat as investors hope that the opportunity cost of holding non-yielding bullions will be lower as interest rates come down. The precious metal is expected to remain in a bullish trajectory, being supported by upward-sloping 20 and 50-day Exponential Moving Averages (EMAs). Momentum oscillators have shifted into the bullish range, indicating more upside ahead.


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