**Gold Price Rises Past $2,350 on Waller’s Dovish Comments, Soft US Dollar**
*By Dilbar Laghari, originally published on FXStreet*
Gold prices surged beyond the psychological $2,350-per-ounce mark during early North American trading as the market reacted to dovish commentary from Federal Reserve Governor Christopher Waller, alongside a weakening US Dollar. This renewed bullish momentum comes amid volatile sentiment surrounding US monetary policy and shifting risk appetite among global investors. In this analysis, we examine the key drivers behind gold’s ascent, glean insight from the latest remarks out of the Federal Reserve, and outline potential scenarios for gold’s price trajectory in the near term.
## US Dollar Weakens, Supporting Gold
The US Dollar Index, which measures the greenback against a basket of major currencies, slipped during the New York session. The decline in dollar strength was attributed mainly to the dovish tone set by policymakers, particularly Governor Waller, who hinted that rate cuts could be nearer than previously anticipated if economic data continues to support disinflation.
A softer dollar tends to boost gold, as the precious metal becomes more attractive to foreign investors and acts as a hedge against inflation and currency depreciation.
**Key factors in dollar weakness:**
– Expectations of Federal Reserve rate cuts in 2024
– Moderation in US economic data, especially in labor and inflation metrics
– Reduced demand for the greenback as a safe haven with easing geopolitical tensions in the Middle East and Eastern Europe
The interplay between currency markets and precious metals has been a defining theme for gold investors, and the latest price movement illustrates how quickly sentiment can pivot from hawkish to dovish based on central bank communication.
## Dovish Shift in Fed Rhetoric
Federal Reserve Governor Christopher Waller’s comments on Thursday provided the catalyst for the latest rally in gold. While acknowledging the persistence of inflation risks, Waller emphasized that the bar for another rate increase is high. He also signalled the possibility of easing rates sooner, should data allow it.
Waller stated that while inflation remains above the Fed’s target, there are signs of underlying disinflationary trends in the economy. This tempered approach to monetary policy has encouraged traders to reassess their positions in interest-rate sensitive assets and safe havens like gold.
**Highlights from Waller’s comments:**
– No immediate need for further rate hikes if inflation remains stable
– Potential for rate cuts as soon as the second half of 2024 if inflation consistently cools
– Will closely monitor both labor market and inflation data in coming months
The influence of Waller’s remarks was immediate in currency and precious metals markets, especially as traders had recently begun to price in a “higher-for-longer” scenario regarding interest rates.
## Inflation, Economic Data, and Gold’s Safe Haven Appeal
Recent releases of US inflation and employment data have sent mixed signals regarding the health of the economy. While inflation remains above the Federal Reserve’s 2 percent target, there have been modest signs of cooling in prices and wage pressures.
– The US Consumer Price Index (CPI) for the last month showed an annualized increase of 3.2 percent, a slight deceleration compared to previous prints.
– Core inflation, which excludes volatile food and energy prices, also fell marginally.
Labor data has been similarly mixed, with some softness in job creation but continued resilience in unemployment claims.
Traders and investors often turn to gold in uncertain economic environments, as it retains its store of value and historically provides a hedge against both inflation and currency weakness. Current market uncertainty, coupled with shifting expectations for Fed action, is supporting further inflows into gold.
## Technical Analysis: Gold Breaks Out of Consolidation
Gold’s break above $2,350 signals a technical breakout after several sessions of consolidation within a narrow trading range. Since testing the lows near $2,320 earlier in the week, gold recovered and rallied on the back of weaker dollar infl
Read more on GBP/USD trading.