• Gold price faces mild selling pressure, Fed’s signals for rate cuts and Middle East woes keep the broader bullish trend intact.
• The Fed acknowledged that policymakers have gained greater confidence due to a slowdown in price pressures in the second quarter.
• Investors await the US ISM Manufacturing PMI and the NFP data for July.

Gold price (XAU/USD) edges lower after posting an almost two-week high at $2,458.50 in Thursday’s European session. The precious metal falls slightly as the US Dollar (USD) rebounds. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back strongly to 104.20 after discovering strong buying interest near the intraday low of 103.86. A sharp recovery in the US Dollar makes investment in Gold less attractive.

However, the broader appeal of the Gold price remains firm as US bond yields have tumbled further on firm expectations that the Federal Reserve (Fed) will pivot to policy normalization in September. 10-year US Treasury yields plummet to almost six-month low near 4.03%. Lower yields on interest-bearing assets bode well for non-yielding assets, such as Gold, as it reduces the opportunity cost of holding investment in them.

The expectations for the Fed to begin reducing interest rates from September rose after the Fed’s dovish guidance on interest rates on Wednesday. The Fed left interest rates unchanged in the range of 5.25% -5.50% and pointed to cooling inflationary pressures, easing labor market strength, as expected, which made speculation for rate cuts in September as a done deal.