Gold Price Forecast: XAU/USD surges to 1,950 amid rising geopolitical tensions, cautious mood
|- Gold price holds positive ground near $1,950 amid the escalating tension and cautious mood.
- The Fed officials reiterated their preference to maintain the interest rates.
- The escalating geopolitical tensions in the Middle East could lift safe-haven flows.
Gold price (XAU/USD) hovers around $1,950 after retreating from the two-month highs of 1,962 during the early Asian trading hours on Thursday. The rally in the precious metal is bolstered by the rising geopolitical tension in the Middle East, which boosts the safe-haven flows.
Meanwhile, the US Dollar Index (DXY), a measure of the value of USD against six other major currencies, climbs to 106.55. US Treasury yields edge higher, with the 10-year Treasury yield surging to 4.911%, the highest level since 2007, and the 2-year Treasury yield staying at 5.229%.
On Wednesday, the Fed officials reiterated their preference to keep rates on hold. These comments lift the US bond yields higher amid robust momentum in US growth. Federal Reserve (Fed) Governor Christopher Waller stated that it's too soon to tell if more policy rate action is needed while adding that the central bank can wait, watch, and see before deciding on a policy path. While Fed Bank of New York John Williams said the central bank needs restrictive monetary policy for a while to cool inflation and the path of monetary policy depends on the data.
Furthermore, the geopolitical conflict between Israel and Hamas remains in focus. On Tuesday, Gaza authorities said an Israeli air attack on Tuesday killed 500 people at a hospital in the Palestinian territory, while Israel stated the damage was caused by a Palestinian attack. The escalating geopolitical tensions in the Middle East and the uncertainty in the market could boost the demand for a traditional safe-haven asset such as gold.
Gold traders will monitor the US Jobless Claims and the Philly Fed index and Existing Home Sales due later on Thursday. Also, Fed Chair Powell is scheduled to speak. Market players will take cues from the data and find trading opportunities around gold price.
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