Gold price trades close to $2,400 amid worsening geopolitical tensions.
The US Dollar’s upside stalls as investors see other central banks postponing rate cut plans.
US bond yields are down despite the Fed maintaining a hawkish stance.
Gold price (XAU/USD) faces pressure to recapture new all-time highs around $2,430 in Friday’s European session. The precious metal still holds some intraday gains, supported by safe-haven flows after worsening Middle East tensions. On Friday, Israel launched a retaliatory attack against Iran targeting the area around the city of Isfahan, Reuters reports. Iran has largely downplayed the attack by saying that their air defence has destroyed three drones. Signs of no further retaliation from Iran and what appears to be a limited airstrike have eased initial fears in markets, prompting Gold to pare gains.
The hawkish interest-rate outlook from Federal Reserve (Fed) policymakers also keeps Gold’s upside limited. Fed policymakers maintain the argument that borrowing costs need to remain higher for a longer period as progress in inflation declining to the 2% target has slowed significantly. Still, this recent hawkish Fed commentary hasn’t translated into a pickup in US Treasury bond yields, with 10-year US Treasury yields falling to 4.58% in Friday’s London session.
The US Dollar Index (DXY), which tracks the US Dollar’s value against six major currencies, edges down to 106.10 as traders reassess expectations for rate cuts from other central banks like the Bank of England (BoE) and the Reserve Bank of New Zealand (RBNZ). While initially it seemed that many central banks would cut rates before the Fed, investors are increasingly pricing in delays as well in other countries amid fears that price pressure could increase again.
