Gold prices went up a bit on Thursday in North America. They increased by more than half a percent after important economic information came out from the United States. The GDP numbers for the start of 2024 were not as good as expected. This made people think that the US Federal Reserve might reduce how much it costs to borrow money. But, at the same time, inflation for that time period went up a lot. This means the Fed might wait longer before cutting interest rates.
In simple terms, the price of gold in US dollars is currently at $2,330. Earlier in the day, it dropped to as low as $2,305 but then went back up. This happened because the yields on US Treasury bonds increased, which usually happens when inflation speeds up. Analysts predicted that the US economy would slow down in 2024, but it actually slowed down even more than they thought, by a whole percentage point in the first three months of the year. This slowdown was expected to be gentle, but inflation during that same time period increased by 3.7%, which is higher than what experts thought. This crushes the hope that inflation would stay around 2%, like it was at the end of 2023.
In easy language, last week, officials from the Federal Reserve (the Fed) changed their minds about something, and recent information supported their decision. The Fed’s leader, Jerome Powell, said that recent data shows there hasn’t been much improvement in controlling inflation this year. Many other policymakers, including Austan Goolsbee from the Chicago Fed, agreed with Powell. Goolsbee mentioned that the Fed’s current plan to manage money is okay for now.
Market Digest: Gold Prices Rise as US Yields Surge, Dollar Softens
Gold prices keep going up even as the yields on US Treasury bonds rise. The yield on the US 10-year note has increased by six basis points to 4.706%. Real yields in the US, which tend to move opposite to gold prices, have also gone up by the same amount, reaching 2.296%.
The value of the US dollar has weakened, which supports the rise in gold prices. The US Dollar Index (DXY), which measures the dollar against other currencies, has fallen by 0.22% to 105.59.
The job market in the US is still going strong. The number of people who filed for unemployment benefits for the week ending April 20 was lower than what experts thought it would be. Instead of the predicted 214,000, it was 207,000, and this number is also less than the previous week’s figure.
Gold Price Analysis: Near $2,330 as Buyers Pause for Breath
In simple words, the price of gold is going up, but it’s finding it hard to pass $2,337, which was its highest point on April 24th. If it does break past that, it could go up to $2,350 and then $2,400. If it keeps going up, it might reach $2,417, and even its all-time high of $2,431.
On the other hand, if the price of gold falls below $2,324, which was its lowest point on April 15th, it might go down to $2,300. If it goes even lower, it could reach $2,229, which was its lowest point on April 23rd, and then $2,222, which was its highest point on March 21st.
