XAUUSD : Gold is turning around and increasing stronglyThe number of applications for unemployment benefits increased, but will the Fed "turn around" to reduce interest rates?
Gold prices regained momentum on Thursday and rose more than 1% as US government bond yields fell, reducing the appeal of the USD. Weaker U.S. labor market data raises the possibility of the Fed cutting interest rates despite dealing with inflationary pressures.
Gold prices traded above $2,330 after bouncing from the day's low at $2,306. On Thursday, the U.S. Bureau of Labor Statistics (BLS) said the number of Americans filing for unemployment benefits rose more than estimated and an earlier report suggested the economy was weakening. This could influence the Fed in future monetary policy decisions after admitting that it is focused on dual goals - ensuring employment and inflation.
Meanwhile, a slew of Fed officials appeared in the news this week. San Francisco Fed President Mary Daly said getting inflation down to the Fed's target will be a difficult road. She added that the past three months' data left policymakers uncertain about future inflation.
On Monday, Richmond Fed President Thomas Barkin commented that recent data were not very encouraging, and emphasized that inflation control was not yet complete. Elsewhere, New York Fed President John Williams noted that consumers are still spending, showing that the economy maintains strength despite slowing growth.
On Tuesday, Neel Kashkari, President of the Minneapolis Fed, predicted that the most likely scenario would be to keep interest rates unchanged in 2024, and said progress in curbing inflation had stalled. Yesterday, Boston Fed President Susan Collins also spoke up. She expressed optimism about being able to bring inflation down to the target level of 2%, and emphasized that the current monetary policy is well-oriented and moderately tightened.
