Falling US Treasury yields have put pressure on the dollar, increasing gold’s appeal. Meanwhile, expectations that the Federal Reserve will take a cautious approach to easing policy after the election have further boosted demand.
Gold’s upward move was also influenced by falling US Treasury yields, which weakened the dollar, and recent indications from the Fed that rate cuts may not be as aggressive as initially expected.
Concerns that higher government spending after the election could fuel inflation have limited the decline in bond yields, further strengthening gold’s value as a hedge against economic uncertainty.
The US dollar is weakening as investors anticipate key economic data
The recent dip in the dollar has provided additional support for gold, especially as government bond yields hover at lower levels. Investors are awaiting U.S. economic data later this week, including third-quarter GDP, the Personal Consumption Expenditures (PCE) Price Index and Nonfarm Payrolls (NFP) data, which will provide insight into the Federal Reserve’s likely policy path.
Key indicators such as the Consumer Confidence Index and Job Openings and Labor Turnover Survey (JOLTS) are also expected to influence the market and determine the outlook for US interest rates.
Geopolitical tensions and US elections strengthen the appeal of gold
The political uncertainty surrounding the US presidential elections is further driving safe haven flows into gold. The race between Vice President Kamala Harris and Republican candidate Donald Trump remains tight, and investors are wary of possible economic shifts after the election.