Gold prices are falling as the US dollar strengthens due to higher US Treasury yields.
Gold prices fell during the Asian session on Tuesday, snapping a three-day gaining streak and trading near $2,050 per troy ounce. The precious metal’s prices are under pressure as the US Dollar (USD) strengthens on the back of higher US bond yields.
US dollar gains momentum following hawkish remarks from Atlanta Fed President Raphael Bostic.
The US Dollar Index (DXY) opened higher near 102.90 on Tuesday. With the 2-year and 10-year yields on US Treasury coupons at 4.20% and 3.99%. Respectively. respectively, by the press time.
Investor confidence in the US Dollar (USD) appears to be recovering. Owing to hawkish remarks made over the weekend by Atlanta Federal Reserve (Fed) President Raphael Bostic. According to the Financial Times, President Bostic warned of “see-sawing” inflation if policymakers chose to cut interest rates too soon. He warned that the rate of inflation’s drop toward the central bank’s 2.0% objective was projected to slow in the coming months.
Because of the escalation of the Middle East crisis, gold demand may improve.
The geopolitical battle between Israel and Gaza has spread to the Red Sea. With the Iran-backed Houthi militia striking naval vessels on a regular basis. Despite recent US and UK military strikes on Houthi targets in Yemen. The situation has caused a shift in previously held beliefs. Market attitude is favorable toward risk aversion. This move has the potential to increase demand for safe-haven assets such as gold.
Market investors will be watching the US NY Empire State Manufacturing Index for January, as well as a speech by Federal Reserve Chairman Ben Bernanke later on Tuesday. These events are expected to provide insights into economic circumstances and central bank viewpoints, influencing market sentiment and decision-making in the XAUUSD pair.
