Gold prices hit a new all-time high in early Tuesday trading, edging closer to $3,700. The precious metal is being supported by a sharp drop in the dollar — with the index measuring its performance against major currencies falling to a two-month low — and by a decline in Treasury yields. Dollar weakness and lower yields, which favour higher gold prices due to the inverse correlation with the non-yielding asset, reflect shifting investor expectations towards a more dovish stance from the Federal Reserve. Markets widely expect the Fed to announce a 25bp rate cut on Wednesday, though uncertainty remains over future guidance and economic projections, as policymakers attempt to balance stubbornly high inflation with signs of a slowing labour market. Against this backdrop, the latest market moves suggest most investors anticipate a dovish tilt from the Fed, a view reinforced by the Senate’s confirmation on Monday of Trump’s nominee to the central bank’s board, Stephen Miran. This dynamic could further pressure the dollar and yields, creating additional scope for gold price gains.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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