**Gold Price Rises Past $2,350 on Waller’s Dovish Comments, Soft US Dollar**
*Written by Anil Panchal | Credit to FXStreet.com*
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Gold (XAU/USD) prices surged above the $2,350 mark during the US session on Thursday, buoyed by dovish commentary from US Federal Reserve officials and a weakening US Dollar. The precious metal continues its upward trajectory as market expectations solidify around potential interest rate cuts before year-end, and safe-haven demand remains strong amid lingering economic uncertainty.
**Key Market Developments Influencing Gold Prices**
– Gold prices have climbed more than 1 percent in the session, breaking past key resistance near the $2,350 level.
– This rally is driven by dovish remarks from Federal Reserve Governor Christopher Waller, stoking anticipation of interest rate cuts.
– Simultaneously, the US Dollar (USD) has been weakening, adding fuel to gold’s bullish momentum.
– Safe-haven flows have increased, given ongoing geopolitical tensions and global economic concerns.
– US Treasury yields have softened, making gold’s non-yielding status more appealing.
Gold’s price action in recent weeks reflects a delicate interplay between macroeconomic data, central bank policy expectations, and persistent geopolitical uncertainty. The hierarchy of these factors can shift rapidly, but today the dominant catalyst is the evolving outlook for US monetary policy following the latest round of Fed commentary.
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**Dovish Fed Comments Ignite Gold Rally**
Federal Reserve Governor Christopher Waller’s comments were the chief influences on Thursday’s surge in gold prices. Waller signaled that the Fed is making progress in its campaign to bring US inflation back toward its 2 percent target, and implied that conditions may soon make rate cuts appropriate.
**Highlights from Waller’s remarks:**
– Waller noted continued progress towards the Fed’s inflation target.
– He emphasized that, should inflation data continue to show improvement, there will be a strong case for interest rate cuts “later this year.”
– Markets have interpreted his tone as considerably dovish, pushing down US Treasury yields and the US Dollar alike.
His comments echoed the sentiment of other Fed officials this week, as concern about over-tightening monetary policy has become more prominent within the committee.
**Impact on Gold:**
– The prospect of lower interest rates decreases the opportunity cost of holding non-yielding assets like gold.
– Lower yields on the 10-year and 2-year Treasuries have reduced the attractiveness of fixed income relative to the yellow metal.
– As a result, gold prices surged as traders re-positioned for a more accommodative Fed stance.
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**Weakening US Dollar a Boon for Gold**
The US Dollar Index (DXY), tracking the greenback against a basket of six major rivals, slumped lower on Thursday. Currencies like the euro and British pound posted gains, while the Japanese yen also found some support.
**How the USD Impacts Gold Prices:**
– Gold is priced in US Dollars. When the Dollar weakens, gold becomes less expensive for foreign buyers, spurring increased demand.
– Recently, the Dollar has come under pressure from shifting Fed expectations and softer US economic data.
– This has served as a tailwind for gold and other Dollar-denominated commodities.
Market watchers now believe there is a growing likelihood of a September rate cut, with some probability also being attached to even earlier action if the next several rounds of economic data cooperate.
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**Key Economic Indicators and Their Effect on Gold**
Gold’s performance isn’t dictated by Federal Reserve policy alone. Traders and investors are also scrutinizing a range of macroeconomic data releases for additional context.
**Recent data points affecting gold:**
– **US Inflation:** Latest Consumer Price Index (CPI) and Producer Price Index (PPI) readings show signs of cooling inflation, reinforcing optimism about rate cuts.
– **Labor Market:** While the US labor market remains relatively strong, some cracks are appearing, as non-farm
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