The price of gold remained steady just below the crucial $2,000 mark on Tuesday, sustaining its position amidst a backdrop of market dynamics and global developments. The precious metal held firm near $1,980, benefitting from a weakened US Dollar and a dip in US Treasury yields, which provided a favorable environment for its ascent.
The US Dollar Index (DXY) experienced a continued downtrend, settling around 105.50, while the 10-year Treasury yield took a sudden reversal, dropping to 4.84% from its earlier peak at 5.02%. The declining bond yields put pressure on the dollar, fostering an advantageous landscape for gold to potentially breach the $2,000 threshold.
Although typically seen as a safe-haven asset during geopolitical turmoil, gold faced headwinds as diplomatic efforts to ease tensions between Israel and Hamas in the Gaza Strip dampened market risk aversion. Despite this, internal discussions within Israel regarding a potential ground invasion of Gaza have raised concerns and maintained some demand for the precious metal.
Moreover, China’s plans to issue additional sovereign debt, coupled with positive US-China economic talks, contributed to an overall buoyant market sentiment. The resulting depreciation of the safe-haven US Dollar further bolstered gold’s upward trajectory.
Looking ahead, market focus remains trained on a series of key US data releases throughout the week. Tuesday’s scrutiny will be on the US S&P Global PMI, followed by heightened attention on Thursday for the Q3 Gross Domestic Product (GDP) figures. The week is set to conclude with a keen eye on the Core Personal Consumption Expenditures (PCE) data on Friday, which will likely steer gold’s trajectory for the days to come.