Gold fell for the second day in a row, but the decline appears limited.
For the second day in a row, the gold price (XAUUSD) still under strong selling pressure at the beginning of a new week, continuing Friday’s retracement decline from the $2,665 region, or a nearly three-week high.
The hawkish signal from the Fed continues to sustain high US bond yields and applies some pressure.
The Federal Reserve’s (Fed) hawkish stance is driving the commodity’s downward trend, which brings it to a new daily low in the $2,625 range during the early European session. In fact, the Fed hinted that it will moderate the pace of rate cuts in 2025. This remains supportive of elevated US Treasury bond yields and directs flows away from the non-yielding yellow metal.
The safe-haven XAUUSD exchange rate may continue to receive support from geopolitical issues and concerns about a trade war.
Aside from this, the safe-haven price of gold is also being undermined by a positive risk attitude. The US Dollar (USD) bulls, however, still cautious below a two-year high that was reached last week and may provide some assistance to the commodity. Along with worries about US President-elect Donald Trump’s tariff plans, geopolitical risks relate to the Russia-Ukraine war and Middle East tensions should also limit losses for the XAUUSD ahead of this week’s key US macro data, including Friday’s Nonfarm Payrolls (NFP).
Daily Market Update:Gold Price pressure comes from high US bond yields driven by the hawkish Fed.
The US Manufacturing PMI increased from 48.4 to 49.3 in December, according to a survey released by the Institute of Supply Management (ISM) on Friday. This suggests that the economy is resilient and has room to develop.
The price of gold being undermine by the Federal Reserve’s continue support for high US Treasury bond yields and the likelihood of a slower rate-cutting pace in 2025.
The benchmark 10-year US government bond’s yield hit its highest level since May 2 and helped the US dollar stay stable last Thursday, slightly below a two-year high.
Despite notable advancements in reducing pricing pressures in recent years, San Francisco Fed President Mary Daly stated on Saturday. Inflation is still uncomfortably higher than the 2% target after two years.
Ahead of the next Fed meeting later this month, investors will have to deal with the publication of significant US macro reports this week, including the highly anticipated Nonfarm Payrolls report on Friday.
While the Houthis stepped up their attacks on Israel, Israeli forces have been attacking medical facilities in the Gaza Strip and more Israeli raids reported in the occupied West Bank on Sunday.
Ukraine claimed to have launched surprise attacks against Russian forces in a number of Kursk locations on Sunday. The Ukrainian counterattacks were also verified by the Russian Defense Ministry.
