Gold, XAU/USD, Treasury Yields, KBW Bank Index, US Dollar, FOMC, Fed

The gold price broke recent range shackles as it launched toward new highs
Treasury yields dipped as risk appetite ran for the hills on regional banking woes
All eyes are on the Fed later today. If they hint at a more hawkish tilt, where will gold go?
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Gold Price Holds the High Ground as Treasury Yields Retreat. Where to for XAU/USD?
May 3, 2023 6:00 AM +04:00Daniel McCarthy, Strategist
Gold, XAU/USD, Treasury Yields, KBW Bank Index, US Dollar, FOMC, Fed – Talking Points
The gold price broke recent range shackles as it launched toward new highs
Treasury yields dipped as risk appetite ran for the hills on regional banking woes
All eyes are on the Fed later today. If they hint at a more hawkish tilt, where will gold go?
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Gold broke higher in the overnight session, racing above US$ 2,000 an ounce with risk sentiment sinking which saw Treasuries go higher on lower yields.
Wall Street finished down after regional banks faced scrutiny by the market despite the embattled First Republic Bank finding a home with JP Morgan at the start of the week. The KBW bank index which includes several leading regional banks, went 4.47% lower on Tuesday.
All the while the unresolved US debt ceiling issue continues to swirl and with these growing concerns for the macroeconomic environment, gold and Treasuries caught a bid.
Treasury yields were lower across the curve with the 2-year note slipping 18 basis points, trading back below 4%. At the New York close nominal 10-year Treasury yields were down 14 basis points, while real yields for the same tenor were down 11 bp.
The real yield is the nominal yield less the market-priced inflation rate derived from Treasury inflation- protected securities (TIPS).
The implication is that inflation expectations were little changed but the returns for supposed risk-free assets like US government debt were sort after. The perceived haven status of the yellow metal also appeared to benefit from the market’s mood.
The US Dollar has had a choppy week so far as traders weigh the potential impact of today’s Federal Open Market Committee (FOMC) meeting.
While the market is anticipating a 25 bp hike, the focus will be on the post-meeting presser for guidance on the Fed’s stance going forward.

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