Gold prices (XAU/USD) struggled to maintain the critical $2,400 level during Tuesday’s North American session as the US Dollar (USD) and Treasury yields surged. Investors are cautious, seeking new indicators to gauge the likelihood of a US recession and awaiting clarity on the Federal Reserve’s plans for interest rate cuts this year.
The US Dollar Index (DXY), which measures the Greenback against six major currencies, rose to nearly 103.00, rebounding from a more than six-month low near 102.15. Concurrently, the 10-year US Treasury yields climbed to just above 3.86%. Historically, higher yields on interest-bearing assets diminish the appeal of non-yielding assets like gold.
Despite these pressures, gold’s outlook remains supported by several factors. Heightened tensions in the Middle East have bolstered gold’s status as a safe-haven asset. The market is bracing for a potential escalation in conflict between Iran and Israel after Iran launched dozens of missiles into Israeli territory on Saturday, retaliating for the assassination of Hamas leader Ismail Haniyeh by an Israeli airstrike in Tehran.
