US inflation expectations probe greenback bulls

As markets await Federal Reserve (Fed) Chairman Jerome Powell’s reaction to the recently hawkish US data, sluggish inflation expectations seem to challenge the US Dollar Index (DXY) bulls during early Monday in Asia, following a two-day rebound from the multi-month low.

  • Gold price justifies downside break of key support line as sellers attack one-month low.
  • Strong United States data underpinned recovery in US Treasury bond yields, US Dollar and weighed on yellow metal.
  • Gold price is pulling in trend-followers which could equate to some meanwhile pain for fresh shorts. 
  • A correction could be on the cards for the initial balance of the week in the Gold price. 
  • Fed speakers will be crucial this week following the NFP numbers. 

That said, the US inflation expectations per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) remain pressured despite firmer US employment data, as well as services activity numbers.

10-year inflation expectations per the aforementioned measure remained depressed near 3.22% while the five-year counterpart struggled to defend the bounce off a fortnight-low surrounding 2.27% by the end of Friday’s North American session.

It should be noted that the US employment report for January joined the upbeat US ISM Services PMI for the stated month to underpin the US Dollar Index (DXY) rebound from the lowest levels since April 2022. However, the DXY traders await Tuesday’s speech from Federal Reserve (Fed) Chairman Jerome Powel for fresh impulse.

What is your view on Gold – bullish or bearish?? You can let us know via the comment box at the end of this piece or you can contact the author via Twitter @goldsilverrepor.

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