Gold Price Forecast: XAU/USD climbs to two-week high, fueled by falling US bond yields, post FOMC’s minutes

• Gold price ascends to a two-week peak at $1877.21, buoyed by declining US Treasury yields.
• Fed minutes reveal concerns over dual-sided risks to inflation and economic activity, influencing policy outlook.
• US producer-side inflation data and varied Fed official stances complicate the gold price trajectory.

Gold price (XAU/USD) climbed for the second straight day and printed a two-week high at around $1877.21 on Wednesday, courtesy of falling US Treasury bond yields spurred by the latest Fed meeting minutes. At the time of writing, the XAU/USD is trading at 1874.73, almost flat as the Asian session begins.

XAU/USD navigates through Fed minutes, inflation data, and official commentary

In the meantime, the US Dollar Index retreated further from the 11-month highs reached last week, a tailwind for XAU/USD prices. Additionally, benchmark yields on the US 10-year Treasury note pulled back from their highest levels since 2007. These factors contributed to the rise in Gold prices.

The US Federal Reserve recently released minutes from its September monetary policy meeting. According to these minutes, participants acknowledged both upside risks to inflation and downside risks to economic activity. This suggests a two-sided challenge in achieving the Fed's objectives. Policymakers also noted that as policy approaches its peak, decisions, and communications should start shifting toward a longer horizon of keeping rates higher for an extended period.

Furthermore, the US Department of Labor (DoL) reported that producer-side inflation figures exceeded expectations, with most figures surpassing those from August. However, the monthly reading for the Producer Price Index (PPI) expanded less than the previous month, indicating that inflation remains a concern, possibly influenced by high energy prices and the automobile union strike.

In terms of recent statements from Fed officials, many have adopted a more neutral stance, except for Fed Governor Michelle Bowman, who emphasized the need for further tightening to address inflationary pressures.

XAU/USD Technical Levels