"The rhetoric could also keep a lid on oil prices, alleviating inflation concerns and pulling Treasury yields down. The latter could limit the impact on non-yielding assets like gold. Overall, a prolonged weakness in the dollar and a more consistent retreat in Treasury yields could help the metal move beyond its current range and return to an uptrend."
"In this regard, attention remains on monetary policy in major economies, where interest rates are expected to remain unchanged in the US and rate hikes are anticipated in the euro area and the UK. A shift to a more restrictive policy could weigh on gold and limit the potential for a recovery. At the same time, the market continued to benefit from ongoing long-term central bank purchases, which could support the market."
Gold prices stabilized after a rebound. A softer US dollar could reduce pressure on the metal. The US dollar weakened as the administration reiterated its intent to maintain a Middle East ceasefire despite incidents with Iran. That rhetoric could also restrain oil prices, easing inflation concerns and pulling Treasury yields lower. Lower yields can support non-yielding assets like gold. If dollar weakness persists and Treasury yields retreat more consistently, gold could move beyond its current range and resume an uptrend. Attention remains on monetary policy, with US rates expected to stay unchanged and euro area and UK rate hikes anticipated. More restrictive policy could weigh on gold, while ongoing long-term central bank purchases could provide support.
Read at London Business News | Londonlovesbusiness.com
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