Gold prices held steady as the US dollar weakened, largely attributed to suspected intervention by Japanese authorities in the currency market. This move by Japan was aimed at propping up the yen, which had fallen to multi-decade lows. The dollar's broad decline also followed data indicating a slowdown in US inflation in June and the Federal Reserve leaving interest rates unchanged, which dampened expectations for a rate hike.
Market participants widely believe Japan intervened, though no official confirmation was made. Analysts cited the suddenness and magnitude of the dollar/yen move, with the dollar falling 2.6 percent against the yen to 159.225 yen, its weakest since May 14. This intervention was seen as Japanese authorities capitalizing on the bearish sentiment generated by weaker US economic data to support the yen ahead of the Bank of Japan's interest rate decision.
Gold, trading around $4,080, has been consolidating within a $4,000-$4,200 range. Despite the weaker US dollar, gold's gains were capped by rising Treasury yields, particularly the 30-year yield climbing above 5.20 percent. Investors are now awaiting the US Personal Consumption Expenditures (PCE) Price Index data, which is the Fed's preferred inflation gauge and could influence future rate expectations. The Federal Reserve's recent decision to keep interest rates at 3.50%-3.75% for the fifth consecutive meeting, while widely expected, revealed divisions within the central bank with three members dissenting in favor of a 25-basis-point rate hike.
