Gold Price Forecast XAU/USD – Stronger as Treasury Yield Dip Weighs on Dollar

Gold futures are edging higher on Friday with lower Treasury yields and a weaker U.S. Dollar setting the bullish tone. Buyers are being motivated by less-hawkish comments from an influential Fed official.

With today’s strength, gold is testing its highest level in nearly two weeks, putting it on track for its biggest weekly rise since mid-January.

At 10:32 GMT, April Comex gold is trading $1852.10, up $11.60 or +0.63%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $170.71, down $0.05 or -0.03%.

Treasury Yields Decline as Investors Look to Fed Speakers for Policy Hints

U.S. Treasury yields fell on Friday as investors awaited a series of remarks from Federal Reserve speakers that could provide fresh hints about the central bank’s interest rate policy plans.

At 09:30 GMT, the yield on the benchmark 10-year Treasury was trading at 4.0086% after falling by over six basis points. The 2-year Treasury yield was last down by more than four basis points to 4.8606%. During Thursday’s trading session it had climbed to levels last seen in 2007, according to CNBC.

Some traders are bracing for volatility later in the session with a slew of Fed speakers on tap. Investors will be scanning their comments for insights into whether the central bank will pursue tighter monetary policy for longer.

On Wednesday, Minneapolis Fed President Neel Kashkari said he would consider a 50 basis point rate hike, while Atlanta Fed President Raphael Bostic on Thursday advocated for continued 25 basis point increases.

Also on Thursday, Fed Governor Waller said, if upcoming data shows the economy moderating and inflation slowing, Waller said he would “endorse” the target federal funds rate rising to roughly the same spot policymakers projected as of December, when 13 or 19 officials saw rates coming to rest somewhere from 5.1% to 5.4%.

The current policy rate is set in a range between 4.5% and 4.75%.

“On the other hand if those data reports continue to come in too hot, the policy target range will have to be raised this year even more to ensure that we do not lose the momentum that was in place,” Waller said.

Short-Term Outlook

Despite the hawkish comments from Kashkari and Waller, the market seems focused on the less-hawkish remarks from Bostic.

On the data front, ISM’s non-manufacturing index report for February is due Friday at 15:00 GMT. It reflects whether economic activity in a range of services sectors is expanding or contracting.

Gold could also be getting support from the notion that the U.S. Federal Reserve will end its interest rate hikes before the European Central Bank does. This will weaken the dollar and possibly support gold.