- Gold price edges lower as the Greenback improves on upbeat US Treasury yields.
- US Dollar gains ground after hawkish comments from the Atlanta Fed President Raphael Bostic.
- Gold demand could improve on risk aversion due to the escalated Middle East conflict.
Gold prices snapped a three-day winning streak, trading lower near $2,050 per troy ounce during the Asian session on Tuesday. The prices of the precious metal face downward pressure as US Dollar (USD) improves on the back of upbeat US bond yields.
The US Dollar Index (DXY) began the Tuesday session with a gap-up, trading higher near 102.90 with the 2-year and 10-year yields on US Treasury coupons standing at 4.20% and 3.99%, respectively, by the press time.
Investor confidence in the US Dollar (USD) seems to be rebounding, driven by hawkish comments made by Atlanta Federal Reserve (Fed) President Raphael Bostic over the weekend. The Financial Times reported that President Bostic indicated the possibility of inflation "see-sawing" if policymakers decide to reduce interest rates prematurely. He cautioned that the decline of inflation towards the central bank's 2.0% target was expected to decelerate in the months ahead.
The geopolitical conflict between Israel and Gaza has extended to the Red Sea, with the Iran-backed Houthi group persistently targeting maritime vessels. Despite recent military strikes by the United States (US) and the United Kingdom (UK) on Houthi sites in Yemen, the situation has led to a shift in the previously positive market sentiment towards risk aversion. This shift could potentially bolster the demand for safe-haven assets such as Gold.
Market participants will closely monitor the US NY Empire State Manufacturing Index for January, as well as a speech by the Federal Reserve's Waller later on Tuesday. These events are anticipated to provide insights into the economic conditions and the central bank's perspectives, influencing market sentiments and decisions in the XAU/USD pair.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends slide below 1.0300, touches new two-year low
EUR/USD stays under bearish pressure and trades at its lowest level since November 2022, below 1.0300 on Thursday. The US Dollar benefits from the risk-averse market atmosphere and the upbeat Jobless Claims data, causing the pair to stretch lower.
GBP/USD slumps to multi-month lows below 1.2400 on broad USD strength
Following an earlier recovery attempt, GBP/USD reversed its direction and declined to its weakest level in nearly eight months below 1.2400. The renewed US Dollar (USD) strength on worsening risk mood weighs on the pair as trading conditions normalize after the New Year break.
Gold benefits from risk aversion, climbs above $2,650
Gold gathers recovery momentum and trades at a two-week-high above $2,650 in the American session on Thursday. The precious metal benefits from the sour market mood and the pullback seen in the US Treasury bond yields.
These 5 altcoins are rallying ahead of $16 billion FTX creditor payout
FTX begins creditor payouts on January 3, in agreement with BitGo and Kraken, per an official announcement. Bonk, Fantom, Jupiter, Raydium and Solana are rallying on Thursday, before FTX repayment begins.
Three Fundamentals: Year-end flows, Jobless Claims and ISM Manufacturing PMI stand out Premium
Money managers may adjust their portfolios ahead of the year-end. Weekly US Jobless Claims serve as the first meaningful release in 2025. The ISM Manufacturing PMI provides an initial indication ahead of Nonfarm Payrolls.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.