Gold saw modest improvement ending a six-day downward trend amid a muted demand for the USD.
Gold pares back some of its slight intraday gains and stays below $2,600 as Monday’s European session begins. The US Treasury bond yields remain high due to expectations that US President-elect Donald Trump’s expansionary policies will increase inflation and restrict the Fed’s ability to further lower interest rates. This proves to be a crucial element, as does a generally positive risk tone providing a challenge to the unyielding yellow metal.
Safe haven, has some support due to the possibility of future geopolitical tensions rising.
The price of gold, a safe haven, has some support due to the possibility of future geopolitical tensions rising. Additionally, the US dollar (USD) still hovering below the year-to-date low that was reached last Thursday. This serves as a tailwind for the XAUUSD, which appears to have ended a six-day losing run as of right now. Before positioning for any additional rebound from the $2,537–2,536 level, a two-month low reached last week, some caution is necessary due to the lack of follow-through purchasing. A number of reasons boost the price of gold, but bulls are wary due to high US bond yields.
Daily Market update:Gold fell to more than a two-month low last week amid the largest weekly decrease since September 2023.
The US dollar’s recent robust rise to a high of more than a year. Some haven flows fueled by geopolitical happenings over the weekend, which also helped the precious metal acquire significant upward traction during the Asian session at the beginning of the week.
US President Joe Biden gave Ukraine permission to launch a deeper strike inside Russia, which sent North Korean forces to support its fight, using long-range missiles provided by the US. In the northern city of Sumy, at least eight people murdered in a Russian strike on a nine-story building. Additionally, Russia attacked energy infrastructure with a major drone and missile attack. Following the murder of Mohammad Afif, the top public relations officer for Hezbollah, Israeli forces carried out military operations in Lebanon and killed at least 111 Palestinians in the Gaza Strip on Saturday.
Susan Collins, the president of the Boston Fed, stated that while another rate decrease in December is possible.
Investors now appear to be certain that President-elect Donald Trump’s ideas for debt-funded tax cuts and tariffs will increase inflation and possibly halt the Fed’s rate-easing cycle. In light of a robust economy, a robust labor market, and inflation that still above the 2% target, Fed Chair Jerome Powell stated last Thursday that there is no need to rush into lowering interest rates.
Susan Collins, the president of the Boston Fed, stated that while another rate decrease in December is possible, it is not a “done deal” and that there is no set course for monetary policy.
In a separate statement, Chicago Fed President Austan Goolsbee said that rates will be far lower than they are now as long as we continue to move closer to the 2% inflation target. The yield stays steady close to a multi-month peak on the benchmark 10-year US government bond, which benefits USD bulls and may limit gains for the non-yielding yellow metal.
https://voiceoftraders.com/analysis/australian-dollar-continues-to-recover-despite-strengthen-usd
