Gold price drop on US Dollar’s rebound

Gold price bears the burden of the US Dollar’s rebound as traders await the key data/events. That said, the US Dollar Index (DXY) marked the first daily gain in three the previous day, down 0.05% intraday near 102.65 by the press time.

A retreat in the US Treasury bond yields joined the quarter-end positioning and cautious optimism in the market to underpin the US Dollar’s latest rebound. Adding strength to the greenback’s rebound could be the geopolitical fears emanating from China, Russia and North Korea. However, an absence of hawkish comments from the Federal Reserve (Fed) officials joins the absence of talks about banking woes to weigh on the US Dollar.

That said, the US 10-year and two-year Treasury yields marked their first daily loss on Wednesday by ending the North American trading session around 3.57% and 4.10% respectively.

It should be noted that the US Dollar gains, as well as the Gold price weakness, could also be linked to the increase in the US inflation expectations, per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED).

Alternatively, the Federal Reserve (Fed) officials’ hesitance in suggesting further rate hikes seems to challenge the greenback buyers, which in turn keeps the Gold buyers hopeful. Bloomberg came out with the news suggesting Fed Chair Jerome Powell showed forecasts for one more rate hike in 2023, which in turn pushed back talks of policy pivot and favor the US Dollar bulls. Though, Vice Chair for Supervision Michael Barr said, “We will be looking at incoming data, financial conditions to make a meeting-by-meeting judgment on rates.”