Gold price marches on softer yields, downbeat Federal Reserve bets

Gold price managed to cheer downbeat United States activity numbers on Monday, following Friday’s softer US inflation clues. That said, the US ISM Manufacturing PMI dropped to the lowest levels since May 2020 in March, to 46.3 versus 47.5 expected and 47.7 prior. On the same line, the final readings of March’s S&P Global Manufacturing PMI eased to 49.2 compared to 49.3 initial estimations. The weaker PMI data traced the last week’s softer prints of the US Core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred inflation gauge, to weigh on the market’s Fed bets.

With this, the US 10-year Treasury bond yields dropped in the last four consecutive days to 3.42% at the latest while the two-year counterpart marked a two-day downtrend in the last to 3.97%. Further, the CME’s FedWatch Tool marked nearly 43% market bets on the Fed’s 0.25% rate hike in May, versus 52% expected on Friday.

Hence, softer US data and yields, not to forget receding hawkish calls of the Federal Reserve’s (Fed) next move, weigh on the US Dollar Index (DXY) and allow the Gold buyers to remain hopeful despite the latest retreat.