Gold Price Forecast: XAU/USD halts a winning streak, trades near $2,050
16.01.2024, 04:55

Gold Price Forecast: XAU/USD halts a winning streak, trades near $2,050

  • Gold price edges lower as the Greenback improves on upbeat US Treasury yields.
  • US Dollar gains ground after hawkish comments from the Atlanta Fed President Raphael Bostic.
  • Gold demand could improve on risk aversion due to the escalated Middle East conflict.

Gold prices snapped a three-day winning streak, trading lower near $2,050 per troy ounce during the Asian session on Tuesday. The prices of the precious metal face downward pressure as US Dollar (USD) improves on the back of upbeat US bond yields.

The US Dollar Index (DXY) began the Tuesday session with a gap-up, trading higher near 102.90 with the 2-year and 10-year yields on US Treasury coupons standing at 4.20% and 3.99%, respectively, by the press time.

Investor confidence in the US Dollar (USD) seems to be rebounding, driven by hawkish comments made by Atlanta Federal Reserve (Fed) President Raphael Bostic over the weekend. The Financial Times reported that President Bostic indicated the possibility of inflation "see-sawing" if policymakers decide to reduce interest rates prematurely. He cautioned that the decline of inflation towards the central bank's 2.0% target was expected to decelerate in the months ahead.

The geopolitical conflict between Israel and Gaza has extended to the Red Sea, with the Iran-backed Houthi group persistently targeting maritime vessels. Despite recent military strikes by the United States (US) and the United Kingdom (UK) on Houthi sites in Yemen, the situation has led to a shift in the previously positive market sentiment towards risk aversion. This shift could potentially bolster the demand for safe-haven assets such as Gold.

Market participants will closely monitor the US NY Empire State Manufacturing Index for January, as well as a speech by the Federal Reserve's Waller later on Tuesday. These events are anticipated to provide insights into the economic conditions and the central bank's perspectives, influencing market sentiments and decisions in the XAU/USD pair.

 

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