Gold price tests resistance while US yields sprint higher

LONDON (January 8) Gold’s price (XAU/USD) edges higher for the second consecutive day and trades around $2,655 on Wednesday after the Institute of Supply Management (ISM) revealed on Tuesday that the prices paid component in the Services sector is turning red hot. The ISM Services Prices Paid index rose to 64.4 in December from 58.2 the previous month. As if that was not enough to push yields higher on inflation concerns, President-elect Donald Trump said at a press conference in Mar-a-Lago that US rates are too high and need to come down substantially, according to Bloomberg. 

On the economic data front, this Wednesday, all eyes will be on the Minutes from the Federal Open Market Committee (FOMC). Traders will look for clues about the interest rate path and comments from policymakers from the last Federal Reserve (Fed) meeting in December. Meanwhile, the US Treasury will allocate a 10-year Note, with the benchmark rate just hitting a nine-month high at 4.697%.

Daily digest market movers: Yields are pushing

• t 13:30 GMT, Christopher J. Waller,  member of the Board of Governors of the Federal Reserve system, will speak on the US economic outlook at an event in Paris.
• At 18:00 GMT, the US Treasury will allocate a 10-year Note. The size of the auction, the already elevated rate levels, and the fact that recent shorter-term auctions faced tepid demand, where demand is normally plentiful, are raising concerns in the market. 
• At 19:00 GMT, the Fed will release the FOMC Minutes from its policy decision in December. 
• In the fallout of the ISM Services Purchasing Managers Index (PMI) release for December, traders quickly pushed back the first possible rate cut from the Fed in 2025 to July. An interest rate cut was foreseen for June before the data came out.
• President-elect Donald Trump reiterated at a press conference in Mar-a-Lago that US rates will need to come down, according to Bloomberg. 

FXStreet