**Gold Price Rises Past $2,350 on Waller’s Dovish Comments, Soft US Dollar**
*By FXStreet Team*
*Original Source: FXStreet*
Gold (XAU/USD) soared beyond the $2,350 mark on Thursday, buoyed by dovish comments from Federal Reserve Governor Christopher Waller and an accompanying retreat in the US Dollar (USD). The precious metal’s rally followed a pattern set throughout much of 2024, as investors have been weighing US central bank signals, inflation data, and ongoing global economic uncertainties.
**Waller’s Dovish Tone Sparks Gold Rally**
Federal Reserve Governor Christopher Waller’s public statements on Thursday were a pivotal catalyst for the gold market. Waller, whose views are closely watched given his influential role at the Fed, signaled that easing inflationary pressures could set the stage for an interest rate cut later this year. This dovish shift spurred buying interest in gold, which typically performs better when rate cut prospects rise and yields decline.
– Waller mentioned that “if inflation continues to ease,” then “there could be room for the Fed to cut rates later this year.”
– He also highlighted that recent data suggested disinflation was regaining traction after a surprisingly hot first quarter for price growth.
– Waller’s remarks underscored a broader sentiment in central banking circles that the rate-hiking cycle is likely over.
These signals prompted renewed speculation that the Federal Open Market Committee (FOMC) could begin lowering borrowing costs as soon as September, leading to a flight toward bullion, which acts as a buffer against anticipated lower yields and potential currency debasement.
**US Dollar Weakens, Driving Gold Higher**
The US Dollar Index (DXY), which measures the greenback against a basket of major currencies, slipped below 105.00 following Waller’s comments and softer-than-expected labor market data. A weaker dollar enhances the appeal of gold, which is priced in dollars, making it less expensive for foreign buyers and fueling global demand.
Contributing factors behind the dollar’s weakness included:
– The ADP National Employment Report revealed private sector jobs increased by only 150,000 in June, well below market expectations of around 160,000 jobs.
– Weekly initial jobless claims came in at 238,000, higher than consensus forecasts.
– Lower-than-anticipated labor market readings reinforced the view that the Fed may soon have enough justification to cut rates.
Investor sentiment leaned toward an accommodative policy stance, pushing US Treasury yields lower and making non-yielding assets like gold comparatively more attractive. The yield on the 10-year Treasury note dropped closer to 4.35 percent at the time of writing.
**Macroeconomic Backdrop Supports Gold’s Uptrend**
Gold’s resurgence is not happening in a vacuum. Several underlying factors have combined to sustain bullion’s appeal throughout 2024, including persistent inflation worries, geopolitical tensions, central bank buying, and signs of global economic moderation.
– Inflation in the United States, while moderating, remains above the Federal Reserve’s 2 percent target. Investors continue to hedge against the risk of sticky price pressures with exposure to gold.
– Central banks, especially from emerging markets such as China and Turkey, have been substantial net buyers of gold, as per World Gold Council data.
– Geopolitical uncertainties, including ongoing conflicts in Ukraine and the Middle East, trade frictions between the US and China, and robust commodity demand from Asia, have bolstered safe-haven flows.
Additionally, equity markets remain prone to volatility amid concerns about lofty valuations, prompting portfolio managers to increase allocations to alternative assets like gold.
**Technical Analysis: Gold Poised for Further Gains**
From a technical perspective, gold’s breakout above $2,350 signals a strong bullish bias in the short term. Momentum indicators, such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), indicate that the metal still has room to
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