Gold prices (XAU/USD) are gaining traction near the significant resistance level of $2,400 during Tuesday’s North American session. The precious metal finds support as US bond yields drop, driven by strong speculation that the Federal Reserve (Fed) will start lowering its key borrowing rates from September. The yield on 10-year US Treasury bonds has fallen to approximately 4.23%. Lower yields on interest-bearing assets decrease the opportunity cost of holding non-yielding investments like gold.
Earlier in the session, gold faced pressure due to expectations that Donald Trump might win the US presidential election in November. Speculation about Trump’s potential second term increased following an assassination attempt on him and President Joe Biden’s withdrawal from the re-election race. However, US Vice President Kamala Harris has been nominated as the Democrats’ candidate.
The growing anticipation of a Trump presidency has raised concerns about increased consumer inflation. According to a note from Australian investment bank Macquarie, a Trump administration could adopt more inflationary policies due to restricted immigration, higher tariffs, and an extension of the Tax Cut and Jobs Act of 2025. This scenario is seen as favorable for the US Dollar (USD). The US Dollar Index (DXY), which measures the dollar against six major currencies, has climbed to around 104.50.
