Gold price rises as US yields drop on stagflation fears

• Gold is up 0.26% as real yields slide and inflation expectations rise on trade policy worries.
• US Consumer Confidence hits 4-year low, boosting stagflation narrative and demand for safe-haven assets.
• Fed officials note reaccelerating goods inflation, adding to market doubts about near-term rate cuts.

Gold price advances on Tuesday as the US Dollar (USD) remains on the back foot and amid falling US real yields, which typically correlate inversely to bullion prices. An unexpected rise in inflation expectations, spurred by US trade policies, boosted demand for the yellow metal, which is gaining 0.26%, trading at $3,018.

The market mood is mixed, with US equity indices split between gainers and losers. US data revealed that Consumer Confidence fell to its lowest level in more than four years as households fear a future recession amid elevated inflation readings, according to the Conference Board (CB). This paints a stagflationary outlook.

Therefore, the yellow metal edged higher as recent data paints a stagflationary economic outlook.

Elsewhere, some Federal Reserve Fed) officials crossed the wires. Governor Adriana Kugler stated that goods inflation has risen, noting that some subcategories have shown signs of reaccelerating. Last but not least, New York Fed President John Williams remarked that both companies and households are facing increased uncertainty about the economic outlook, reflecting growing concerns about future conditions.

The money market has priced in 64.5 basis points of Fed easing in 2025, according to Prime Market Terminal interest rate probabilities data.

Daily digest market movers: Gold price underpinned by high inflation expectations

• The US 10-year T-note yield is down three basis points (bps) at 4.308%. US real yields drop three bps to 1.956% according to US 10-year Treasury Inflation-Protected Securities (TIPS) yields.
• The US Dollar Index (DXY), which tracks the performance of the Greenback against a basket of six currencies, drops 0.15% to 104.15.
• The CB Consumer Confidence in March fell from 100.1 to 92.9, missing estimates of 94.
• According to the CB, write-in responses to the survey showed "worries about the impact of trade policies and tariffs in particular are on the rise."
• On Monday, Atlanta Fed President Raphael Bostic stated that he supports only one rate cut this year and doesn't expect inflation to return to target until around 2027.

XAU/USD technical outlook: Gold price advances past $3,010

The uptrend in Gold remains in play, though buyers are lacking the conviction to achieve a daily close above the current week's high of $3,036, which could exacerbate a test of the record high price at $3,057. A breach of the latter will pave the way for testing $3,100.

The Relative Strength Index (RSI) is bullish, with momentum backing buyers. Therefore, a further upside in Bullion prices is seen.

On the other hand, if XAU/USD drops below $3,000, this will expose the February 24 swing high at $2,956, followed by the $2,900 mark and the 50-day Simple Moving Average (SMA) at $2,874.