Gold price rebounds as United States Treasury bond yields, US Dollar ease

US Dollar Index (DXY) and the benchmark Treasury bond yields fade recent upside momentum as full markets return. Also challenging the greenback and the bond yields could be the latest comments from the Federal Reserve (Fed) officials and market’s concerns of the US recession.

That said, Rick Rieder, Chief Investment Officer of global fixed income at BlackRock, the world's largest asset manager, said late Monday, “The Federal Reserve may not need to raise interest rates further to fight inflation, as the fallout from last month's turmoil in the banking sector and a series of recent labor data point to a slowing US economy,” per Reuters.

On the other hand, Federal Reserve (Fed) Bank of New York President, as well as the Fed’s Vice Chairman of the rate-setting committee, John Williams anticipated slower inflation while ruling out the interest rates as culprits for the previous month’s bank fallouts.

With this, the US Dollar Index (DXY) eases to 102.40 while printing the first daily loss in five. On the other hand, the US 10-year and two-year Treasury bond yields retreat to 3.40% and 3.99% at the latest.

Even so, the CME’s FedWatch Tool suggests a 72% chance of the Fed’s 0.25% rate hike in May, versus 57% odds favoring the same in the last week, which in turn keeps the Gold sellers hopeful.

Sino-US tension also weighs on XAU/USD price

Apart from the recent hawkish bets on the Federal Reserve’s (Fed) 0.25% rate hike in May, the looming geopolitical tension between the United States and China also exert downside pressure on the Gold price, due to the dragon nation’s status as one of the biggest Gold consumers. That said, Beijing marked a solid military drills around Taiwan after Taiwan President Tsai Ing-wen’s US visit.

On the contrary, hopers of more growth in Asia, the key Gold consuming region, seem to help the XAU/USD bulls of late. International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva said that “the global economy is estimated to grow less than 3 percent in 2023, with India and China expected to account for half of the global growth this year.