US inflation expectations, as measured by the 10-year breakeven inflation rate, fell from a two-week high on Friday, according to data from the St. Louis Federal Reserve (FRED). As a result, the risk barometer fades late June’s recovery advances, implying that traders will have even more difficulty predicting market emotion.
The reduction in inflation expectations could be linked to the recent US jobs report, which revealed mixed data and pushed back expectations for monetary policy changes by the Federal Reserve. However, a reevaluation of the situation keeps bulls optimistic.
It’s worth mentioning that US 10-year Treasury yields tracked inflation predictions the day before, indicating a 4.9 basis point (bps) drop to 1.43 percent.
While the drop in inflation predictions appears to be causing alarm among gold investors, the general optimism about price pressure in the US may keep Fed rate rise hopes alive.
Read: XAU/USD Tracks Mildly Offered Gold Price Forecast Futures on the S&P 500 are trading below $1,800./n
