Gold price rises as US Dollar retreats despite static United States Treasury bond yields

Gold price has an inverse relationship with the US Dollar Index, which in turn takes clues from the US Treasury bond yields and hence becomes crucial to watch for short-term Gold price directions.

US Dollar Index (DXY) holds lower grounds near 102.10 early Wednesday, following the U-turn from a one-week high, as well as snapping a four-day winning streak, the previous day. That said, the US 10-year and two-year Treasury bond yields grind higher around 3.43% and 4.03 during a four-day and five-day uptrend respectively.

As a result, the recently firmer US Treasury bond yields seem to prod the Gold price even if the US Dollar weakness puts a floor under the XAU/USD price.

Federal Reserve talks, interest rate futures prod USD bulls

While tracing the recent moves of the US Dollar, the United States Treasury bond yields and the Gold price, the mixed comments from the Federal Reserve (Fed) Officials and interest rate futures gain major attention.

On Tuesday, Philadelphia Fed President Patrick Harker said that the Federal Reserve will continue to look closely at available data to determine what, if any, additional actions they may need to take. Before him, New York Fed President John Williams said that if inflation comes down, we will have to lower rates. Furthermore, Chicago Fed President Austan Goolsbee, said on Tuesday that they need to be cautious about raising interest rates after recent development in the banking sector.

On the other hand, the CME’s FedWatch Tool signals a 64% chance of a 0.25% Fed rate hike in May versus 72.0% a day before.

Hence, the indecision among the Fed policymakers join the recently easy hawkish Fed bets to propel the Gold price ahead of the top-tier data/events.