During the early European session, the price of gold (XAU/USD) experienced a reversal from an intraday dip, reaching the $2,035 region. Although it remains slightly below the two-week high observed on Friday, the precious metal benefits from the ongoing challenges faced by the US Dollar (USD) in attracting buyers. The decline in US Treasury bond yields, considered a significant factor acting as a tailwind for commodities, further supports the upward movement of gold.
The persisting concerns over geopolitical risks, particularly arising from conflicts in the Middle East and the prolonged Russia-Ukraine war, continue to provide additional support to gold as a safe-haven asset.
Despite these positive developments for gold, the key question is whether the precious metal can capitalize on its strength beyond the 50-day Simple Moving Average (SMA). This uncertainty is influenced by expectations of a hawkish stance from the Federal Reserve (Fed). Market participants widely anticipate that the US central bank will maintain higher interest rates for an extended period. While this expectation is likely to restrict significant downside for US bond yields, it may favor the USD bulls. Consequently, caution is warranted before anticipating any substantial appreciation in the XAU/USD.
Traders are currently turning their attention to the upcoming release of New Home Sales data from the United States, which could potentially provide further impetus and direction for gold prices.
