Gold price is trading with a bullish bias and remains close to its all time high.
The gold price (XAUUSD) attracted some buyers for the sixth day in a row on Tuesday, moving closer to the all time high reached the day before. Geopolitical tensions rose after reports of an Israeli strike on a building near Iran’s embassy in Syria’s capital. This, Combined with doubts over whether the Federal Reserve The Federal Reserve will lower interest rates three times this year, Weighing on global risk Sentiment and acting as a Tailwind for the safe haven precious metal.
Reduced June Fed rate drop bets continue to support the USD and may act as a Headwind for the metal.
Meanwhile, the positive US Manufacturing Statistics posted on Monday Prompted Investors to reduce their expectations for a June Fed rate cut. This keeps US Treasury bond yields rising and pushes the US Dollar (USD) to its highest level since February 14, potentially capping any further appreciation of the non-yielding gold price. Bulls may also choose to wait for some near-term stabilization under overstretched conditions on the daily chart, ahead of US macro data and comments from a number of influential FOMC members.
Daily Market Movers: Gold price approaches record high as geopolitics offsets stronger USD.
The Institute for Supply Management stated that the US manufacturing sector gained in March after 16 consecutive months of contraction, prompting investors to lower their expectations for a Federal Reserve rate decrease in June.
The shift in expectations raises the yield on the rate-sensitive two-year and benchmark 10-year US government bonds to a two-week high, supporting the US dollar and putting some pressure on the gold price.
A strong increase in US Treasury bond yields, combined with the danger of further escalation of geopolitical tensions in the Middle East, dampens investors’ desire for risky assets and supports the safe-haven XAUUSD.
The cautious market mood, along with geopolitical uncertainties, could provide support for the safe-haven XAUUSD.
Israeli air attacks completely destroyed the Iranian embassy’s On Monday, Israel launched a consular annex in Syria, killing seven people, including a top Revolutionary Guard commander, and raising concerns about more confrontation between Israel and Iran’s supporters.
Furthermore, the US PCE Price Index issued on Friday showed a small increase in inflation in February, keeping Fed rate cuts on the table, which should help limit the downside for the non-yielding metal.
Tuesday’s US economic calendar includes the release of JOLTS Job Openings and Factory Orders, as well as remarks from a number of key FOMC members, which should drive USD demand and offer a new impetus.
