Gold price has attracted some haven flows, following geopolitical tensions in the Middle East.
Gold price (XAUUSD) edged higher during the Asian session on Thursday. But it remains below the 50-day Simple Moving Average (SMA) key barrier, which is about $2,032. Or more than a one-week high reached the previous day. The Middle East turmoil continues to drive demand for conventional safe-haven assets. Which, along with a weaker US dollar, works as a tailwind for the precious metal. However, the increase is not bullish. Conviction comes in the backdrop of rising expectations that the Federal Reserve (Fed) would hold interest rates higher for longer.
Hawkish FOMC minutes support rising US bond rates while capping further gains.
The bets were bolstered by hawkish FOMC meeting minutes released on Wednesday. Which revealed policymakers’ concerns about reducing interest rates too rapidly. This, combined with a lackluster 20-year bond auction. Sparked a sell-off in the US debt market, sending the yield on long-term US government bonds to its highest level in nearly three months. This may prevent traders from placing strong bullish wagers around the non yielding Gold price and cap the upside. So proceed with caution before positioning for a one-week-old uptrend extension.
Daily Market Movers: Gold price gains boost from rising violence in the Middle East.
The latest attacks by Yemen’s Houthi rebels have Gold prices return to near-weekly highs, but upside potential remains limited.
Following geopolitical tensions in the Middle East, the gold price has drawn some haven flows.
Hawkish FOMC minutes support rising US bond rates but limiting future gains.
A sustained move over the 50-day SMA should open the way for additional short-term gains.
The gold price (XAUUSD) rose higher during the Asian session on Thursday, but it remains below the 50-day Simple Moving Average (SMA) important barrier, which is approximately $2,032, or more than a one-week high hit the day before. The Middle East instability continues to drive demand for traditional safe-haven assets, which, along with a weaker US currency, acts as a tailwind for the precious metal. Nevertheless, the The growth is not bullish. Ships in the Red Sea and Bab al-Mandab strait raise concerns about a further escalation of military action in the Middle East, supporting the safe-haven gold price.
US Central Command, two anti-ship ballistic missiles were launched by the Iranian-backed Houthi terrorist group.
According to the US Central Command, two anti-ship ballistic missiles were launched by the Iranian-backed Houthi terrorist group, which claims to be supporting Palestinian people amidst Israel’s retaliatory military onslaught in the Gaza Strip.
Despite diplomatic attempts by numerous countries, fighting between Israel and Hamas has not subsided, with the former warning of a possible ground invasion of Rafah, where more than 1.5 million Palestinians are sheltering.
The US dollar is reaching its lowest level in more than two weeks, lending fresh support to the precious metal, despite the hawkish-sounding FOMC meeting. Minutes prevent any major appreciation shift.
The January FOMC meeting minutes revealed that members agreed. That they required more confidence in decreasing inflation before discussing rate cuts. Reinforcing predictions that the Fed will hold rates higher for longer.
Market players moved back expectations for when the Fed will begin decreasing interest rates to June, which, combined with a weaker 20-year bond auction, drove the yield on long-term US Treasury bonds up across the board.
The yield on the benchmark 10-year US government bond rose to its highest level since November 30, limiting the Greenback’s downside and helping to contain the non yielding yellow metal.
Traders now look to the US economic docket, which includes the regular Weekly Initial Jobless Claims. The flash PMI prints and Existing Home Sales data. For some impetus ahead of Fed Governor Philip Jefferson’s address.
