The price of XAUUSD ended last week on a bitter note after a depressing US NFP report failed to encourage haven flows into the metal. The US Dollar index dropped nearly half a percent, but that didn’t offer much reprieve to falling bullion prices. Markets are still pricing in an increasingly hostile Federal Reserve rate hike path despite the weaker-than-expected NFP print.
The Treasury yields have continued to hike into the weekend. The 10-year note’s yield rose to its highest level since January 2020 as traders ditch government bonds in planning for higher rates. A prolonged rise in prices across the economy is the driving force bolstering rate hike bets, and some Fed officials are now calling for three rate hikes this year. Gold is expected to perform poorly in rising rate environments, given the asset’s non-interest-bearing nature.
Saying that, Gold may have a hard time going higher in the near term. Nevertheless, this week will see the US report updated inflation data for December. Market participants expect the core consumer price index (CPI) to rise 5.4% on a year-over-year basis, according to a Bloomberg survey. That would be up from November’s 4.9% print.
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