Gold prices are maintaining modest gains above 0.15% during the mid-North American session on Tuesday, driven by prevailing risk aversion and a broad-based strength in the US Dollar (USD). The midday market activity sees US Treasury bond yields erasing earlier gains, providing support for the precious metal, which typically exhibits an inverted correlation with the 10-year benchmark note yield. As of the latest update, XAU/USD is trading at $2030, rebounding from a daily low of $2026.17.
Despite the rise in Gold’s price, the Greenback is making notable gains against the non-yielding metal, showcasing the complex dynamics at play in the current market environment. The limited economic calendar in the United States revealed the NFIB Business Optimism Survey for December, indicating a slight improvement in small business sentiment, albeit remaining below the 50-year average of 98, with a reading of 91.90.
Additionally, the US Department of Commerce reported a narrowing of the US trade deficit in November to $-63.2 billion, surpassing estimates of $-65 billion and October’s figure of $-64.5 billion. This data contributed to a brief surge in XAU/USD, reaching a daily high of $2042.01 before retracing to current levels.
While US Treasury bond yields continue to hover at lower levels, the US Dollar Index (DXY), representing the USD against a basket of six currencies, has posted a solid 0.20% gain, reaching 102.49.
Looking ahead, the trajectory of Gold’s price remains contingent on upcoming economic data, notably December’s inflation figures in the United States. Traders are anticipating the Consumer Price Index (CPI) to increase by 3.3% YoY, with the core CPI expected at 3.8% YoY, slightly lower than the previous reading. This data is likely to influence Gold’s price action as market participants assess its implications for monetary policy and the broader economic landscape.
