Gold Dragged Down by Strong Dollar and US Yields, But Geopolitics Remains a Shield
Gold prices slipped below the psychological level of $4,200 per troy ounce in Monday's US trading session, as the US dollar strengthened and US government bond yields rose. The XAU/USD pair briefly touched an intraday high of around $4,218 before retreating to around $4,180. Market participants appeared to be holding back and reluctant to add new positions ahead of the Federal Reserve's interest rate decision on Wednesday, which will be the Fed's final policy meeting in 2025.
The market is still anticipating further interest rate cuts, potentially lowering the Fed Funds Rate to the 3.50%–3.75% range. However, the release of the latest Personal Consumption Expenditures (PCE) data and mixed signals from the labor market have led market participants to consider that the Fed could opt for a slower easing path heading into 2026. These expectations have helped support the US dollar and lifted bond yields, thereby dampening interest in non-yielding gold.
On the other hand, geopolitical factors remain a key driver for gold. The ongoing Russia-Ukraine war, coupled with escalating tensions between Thailand and Cambodia, are keeping gold's demand as a safe haven alive. In Newsmaker's perspective, gold's current movement reflects a tug-of-war between interest rate sentiment and global uncertainty: technical pressures are emerging as the dollar strengthens, but gold's big story as a hedge against geopolitical risks remains unfinished.
Source: Newsmaker.id
