Gold prices (XAU/USD) saw a modest increase on Tuesday, rebounding from a two-week low of $2,325. The precious metal’s rise is attributed to a weaker US Dollar (USD) and increased demand for safe-haven assets due to ongoing geopolitical tensions in the Middle East. However, the upward momentum of gold is being countered by higher short-term Treasury yields, which are buoyed by recent hawkish minutes from the Federal Reserve and robust US economic data, likely supporting the USD in the near term.
Market participants are adopting a cautious stance ahead of key US inflation data scheduled for this week. On Tuesday, the US Conference Board’s Consumer Confidence report will be released, accompanied by speeches from Federal Reserve officials Neel Kashkari, Mary Daly, and Lisa Cook.
The highlight of the week will be the US Core Personal Consumption Expenditures Price Index (Core PCE) on Friday. Should Fed officials maintain a hawkish tone or if inflation data remains persistently high, expectations for the first Fed rate cut might be deferred. This scenario would likely strengthen the USD and place downward pressure on the USD-denominated gold prices.
