Gold edged up ahead of Fed’s hawkish turn serves as a tailwind for the USD.
The gold price (XAUUSD) has risen steadily throughout the Asian session, reaching a new daily high of roughly $2,620 in the last hour. Against the backdrop of persisting geopolitical threats and trade war fears, a slight dip in US Treasury bond yields provides some support for the commodity. Any real appreciation for the XAUUSD, however, appears elusive in the aftermath of the Federal Reserve’s (Fed) hawkish tilt.
Indeed, the Fed last week hinted that it will decrease the pace of interest rates. Cuts in 2025. This helps the US Dollar (USD) to remain near a two-year high and should act as a tailwind for US bond yields, limiting advances in the non-yielding yellow metal. This, in turn, calls for prudence before resuming a minor rebound from a one-month low reached last week amid low trading volumes.
Daily Market Update:Gold prices are bolstered by refuge flows and falling US bond yields.
Last week, the Federal Reserve reduced its estimate for further rate decreases in 2025, signaling a turning point in its monetary policy and emphasizing the uncertainty surrounding prospective policy changes under the incoming Trump administration.
The yield on the benchmark 10-year US government bond rocketed up to its highest level since May on Monday. The US dollar remained solid near a two-year high reached last week, which could limit the upside for the non-yielding gold price.
The Israel Defense Forces (IDF) stated on Tuesday that sirens activated in central and southern Israel, and that it intercepted a rocket fired from Yemen as Israeli forces continued their attacks on beleaguered northern Gaza.
Geopolitical concerns and trade war fears should boost the safe-haven XAUUSD.
Russian soldiers have captured two villages in Ukraine and are making steady progress in the Donetsk region. US President-elect Donald Trump has asked Ukrainian President Volodymyr Zelenskyy to consider a cease-fire and abandon Russian-occupied territory.
Traders are currently anticipating the release of the Richmond Manufacturing Index, which, together with US government yields, may affect the USD and offer some impetus amid a very little liquidity on Christmas Eve.
