XAUUSD : Gold prices and worries about geopolitical instability
Updated
With the war situation in the Middle East continuously escalating, gold prices may continue to increase next week.
In the past week, although the gold price had a downward adjustment after the US CPI data was released, the price immediately rebounded after the USD weakened because the market continued to expect the Fed to cut reduce interest rates next March. In addition, escalating geopolitical tensions in the Middle East have also contributed to the increase in gold prices.
Gold experienced a steady rise near the weekend thanks to geopolitical tensions and weakness in the US dollar. The coordinated attack between the US and UK on the Houthi rebels in Yemen in recent days has made the market concerned that the war situation may gradually get worse.
In addition, US government bond yields have also decreased slightly over the past month as the market continues to expect the Fed will cut interest rates in the near future. According to CME Fed Watch, traders are expecting the Fed to reduce interest rates by a total of 150 bps this year with the first reduction starting in March. This has caused the 2-year US government bond to fall to 4.15 % from a multi-year record high of 5.26% in October 2023.
In the past week, although the gold price had a downward adjustment after the US CPI data was released, the price immediately rebounded after the USD weakened because the market continued to expect the Fed to cut reduce interest rates next March. In addition, escalating geopolitical tensions in the Middle East have also contributed to the increase in gold prices.
Gold experienced a steady rise near the weekend thanks to geopolitical tensions and weakness in the US dollar. The coordinated attack between the US and UK on the Houthi rebels in Yemen in recent days has made the market concerned that the war situation may gradually get worse.
In addition, US government bond yields have also decreased slightly over the past month as the market continues to expect the Fed will cut interest rates in the near future. According to CME Fed Watch, traders are expecting the Fed to reduce interest rates by a total of 150 bps this year with the first reduction starting in March. This has caused the 2-year US government bond to fall to 4.15 % from a multi-year record high of 5.26% in October 2023.
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