U.S. inflation data bolstered the case for Federal Reserve rate cuts, with Treasury yields remaining stable following a significant drop. The prospect of lower interest rates sent 10-year yields down by seven basis points to 4.21% in the previous session. Chicago Fed President Austan Goolsbee hailed the CPI data as “excellent,” noting that it provided the confidence needed to believe the central bank is on track to achieve its 2% inflation target.
Meanwhile, the yen experienced volatility on Friday as the Bank of Japan conducted rate checks with traders, reinforcing the belief that authorities had intervened in the market on Thursday to support the currency. This intervention implies a commitment to maintaining market stability, necessitating further action to uphold the credibility of the initial move.
In the commodities market, India’s gold prices declined, with the rate per gram falling to 6,465.21 Indian Rupees (INR) from INR 6,485.48 on Thursday. The price per tola decreased to INR 75,408.89 from INR 75,645.38.
Simultaneously, XAU/USD gold prices reversed early Friday, testing the $2,400 threshold after reaching a two-month high of $2,425 on Thursday. Traders are now focused on the upcoming U.S. Producer Price Index (PPI) data and potential Japanese forex market interventions, which could influence the next move in gold prices. A recovery in the U.S. dollar could extend the corrective downside for gold, but market participants remain cautious ahead of the PPI report and preliminary Michigan Consumer Sentiment and Inflation Expectations, which could renew selling pressure on the dollar and spark a fresh rally in gold prices.