• Gold soars above $2,330 as investors bet on Fed rate cuts later this year.
• Risk aversion due to European political turmoil boosts demand for safe-haven assets like gold.
• US Consumer Sentiment dips in June, inflation expectations remain above Fed’s 2% target.
• XAU/USD is underpinned by fall of 10-year US Treasury yield.

Gold's price spiked during the North American session on Friday after inflation data in the United States (US) increased investors' hopes of the Federal Reserve (Fed) cutting interest rates later this year. Additionally, risk aversion, spurred by Europe’s political uncertainty, triggered a flight to safety, bolstering the golden metal.

The XAU/USD trades at $2,333, gaining more than 1.30% after bouncing off daily lows of $2,301. Sentiment remains sour, yet US equities recovered some during the last hour of trading, with the Nasdaq up 0.28%, while the S&P 500 trims its earlier losses, shy of being flat on the day at -0.10%.

On the data front, US Consumer Sentiment deteriorated in June, while inflation expectations for one and five years remained above the Fed’s 2% goal. Meanwhile, US inflation data revealed during the week was cheered by investors, who still bet that the US central bank will slash rates twice instead of just once, as policymakers projected.

Data from the Chicago Board of Trade (CBOT) shows traders expect 39 basis points (bps) of easing during the year via December’s 2024 fed funds rate contract.

The US 10-year Treasury note yield dropped three bps to 4.211%, a tailwind for the non-yielding metal, shrugging off China’s bullion purchasing pause.

News that the People’s Bank of China paused its 18-month bullion buying spree weighed on the precious metal. PBOC holdings held steady at 72.80 million troy ounces of Gold in May.