US inflation expectations, as measured by the 10-year breakeven inflation rate, per the St. Louis Federal Reserve (FRED) data, declined for the second consecutive day by the end of Thursday’s forecasts. In doing so, the inflation precursor drops to the lowest since March 18 to 2.27%.
The drop in inflation expectations could be linked to the recent monetary policy announcements from the US Federal Reserve (Fed) wherein Chairman Jerome Powell kept term reflation fears as “transitory” despite expecting a bit longer stretch to the north.
It’s worth noting that the US 10-year Treasury yields followed the inflation expectations the previous day while reversing the Fed-led jump with a downtick of over five basis points (bps) to 1.51%, unchanged by the press time.
Although the downtick of the inflation expectations and weighed on the gold prices, via Treasury yields, on Thursday, the recent pause in the market’s move, amid a lack of major catalysts, helps the yellow metal to consolidate recent losses from a six-week low flashed yesterday.