Gold Price Jumps to Two-Week High on Fed Rate Cut Hopes, Softer US Dollar

SEATTLE (Scrap Monster):  Gold price (XAU/USD) attracts some follow-through buying for the second straight day and climbs to a two-week top, around the $2,375 area during the European session on Thursday. Moreover, the near-term bias remains tilted in favor of bulls in the wake of bets that major central banks will lower borrowing costs to bolster economic activity. In fact, the Bank of Canada (BoC) on Wednesday lowered its benchmark rate for the first time in four years, from a more than two-decade high and signaled concern about slowing economic growth. Furthermore, the European Central Bank (ECB) is also expected to cut interest rates for the first time since March 2016 at the end of its June policy meeting later today.

Meanwhile, the markets are now pricing in a greater chance for an imminent rate cut by the Federal Reserve (Fed) amid signs of a slowdown in the US economy. The expectations keep the US Treasury bond yields depressed near the lowest level in over two months and fail to assist the US Dollar (USD) to build on its modest recovery gains registered over the past two days. This, along with persistent geopolitical tensions stemming from ongoing conflicts in the Middle East, continues to act as a tailwind for the safe-haven Gold price. Despite a combination of supporting factors, the upside for the XAU/USD seems limited as traders keenly await the release of the US Nonfarm Payrolls (NFP) report on Friday. 

Courtesy: www.fxstreet.com