Gold Price Forecast: XAU/USD extends losses near $1,970 as capital shifts to riskier assets
|- Gold price declines as capital shifts toward riskier assets due to improved risk sentiment.
- Gold demand is reduced due to the resurgence in US Treasury yields.
- Upbeat China’s Trade Balance data could provide support for the price of the precious metal.
Gold price losses more ground, which can be attributed to the prevailing optimistic market sentiment, leading to a shift in capital towards other, more risk-inclined assets. The price of the yellow metal trades lower around $1,970 per troy ounce during the Asian session on Tuesday.
Moreover, the reduced demand for the precious metal is linked to the resurgence in US Treasury yields, as the 10-year US Treasury yield bounced back from the six-week low observed on Friday. At the time of writing, the long-term bond yield rests at 4.63%. The positive momentum in US bond yields bolsters the strength of the US Dollar (USD), evident in the rebound of the US Dollar Index (DXY) from its two-month low, trading near 105.20 at the moment.
However, bullion prices saw an uptick as investor sentiment improved on speculation suggesting that the US Federal Reserve (Fed) might halt its monetary policy tightening, fueled by lackluster employment data from the United States (US). In addition, the latest report from the World Gold Council (WGC) reveals that the world's central banks acquired a combined 337 metric tons of gold in Q3. Year-to-date, these banks have added an impressive 800 tons to their reserves. Notably, emerging markets took the lead among the largest buyers, reflecting a continued trend of diversification away from the US dollar.
However, the contained conflict in the Middle East between Israel and Hamas has prompted outflows from non-yielding assets like Gold.
Additionally, traders may keep an eye on China's Trade Balance data for October scheduled to be released later in the day, anticipated to climb to $81.95B from the previous $77.71B. A Trade Surplus exceeding expectations could potentially boost the demand for gold.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.