Gold reaches two-week high

Gold prices (XAU/USD) surged to a new two-week high of $2,462.30 during Thursday's American session. This robust performance is attributed to a sharp decline in US bond yields, fueled by strong expectations that the Federal Reserve (Fed) will begin policy normalization in September, News.Az reports citing FXStreet.

Notably, the 10-year US Treasury yields fell below 4.0% for the first time in six months. Lower yields on interest-bearing assets are favorable for non-yielding assets like gold, as they reduce the opportunity cost of holding these investments,

Expectations for the Fed to start cutting interest rates in September increased following its dovish guidance on interest rates on Wednesday. The Fed maintained the interest rates in the range of 5.25% - 5.50% and indicated that inflationary pressures are easing and the labor market is losing strength, as anticipated, leading many to speculate that rate cuts in September are almost certain.

Fed Chair Jerome Powell stated, "If we were to see inflation moving down more or less in line with expectations, growth remains reasonably strong, and the labor market remains consistent with current conditions, then I think a rate cut could be on the table at the September meeting," according to Reuters.

News.Az