• XAU/USD climbs as falling US Treasury yields boost demand for non-yielding assets.
• Traders anticipate rate cuts from major central banks as inflation cools with the ECB expected to act on October 17.
• Geopolitical uncertainty and upcoming US elections fuel demand for Gold as a safe-haven asset amidst economic slowdown fears.

Gold prices rose during the mid-North American session on Wednesday, underpinned by the drop in US Treasury yields and the shrug off recent US Dollar strength. Expectations that major central banks would cut rates amid soft inflation readings weighed on bond yields and boosted the non-yielding metal. At the time of writing, the XAU/USD trades at $2,674, up by 0.46%.

Market sentiment has improved lately, as portrayed by three of the four US equity indices trading in the green. US Treasury bond yields had extended their fall, a tailwind for Bullion prices, which hit $2,685, the year-to-date (YTD) high, yet lacked the strength to push prices toward $2,700.

During the European session, inflation in the UK tumbled below the Bank of England’s (BoE) 2% goal. Hence, the BoE is expected to resume its easing cycle in tune with the Federal Reserve and the European Central Bank. Traders expect the ECB to lower rates on October 17 as inflation aimed toward the bank’s target and also on fears the bloc's economy is at risk of hitting a recession.

Gold climbed as traders seeking safety bought the dip amid woes that the global economy could be headed for a slowdown and uncertainty on upcoming US elections.

UBS analysts wrote, “We anticipate uncertainty and volatility to rise until the next US administration is settled,” and suggested that gold and oil could be “effective portfolio hedges.”