Gold Price Analysis: XAU/USD swings between $1940s-$1960s, set for solid weekly gains despite higher yields By Frank_Macro XAUUSD Gold
yields to fresh multi-year highs to reflect an upping of hawkish Fed bets as market participants reacted to a chorus of major US banks issues hawkish new Fed policy calls helped push XAU/USD back from weekly highs in the $1960s. But geopolitical uncertainty, this time regarding the security of Saudi Arabia’sinfrastructure after a site in Jeddah was hit by a Houthi missile, is helping keep pricing underpinned above support in the form of recent highs in the $1940s area.
At current levels in the mid-$1950s, gold is trading flat on the day and looks set to post a weekly gain of just under 2.0%. That is quite remarkable given that, on the week, the US 2-year and 10-year yields are both up more than 30 bps as markets bet on a much more hawkish Fed tightening path following recent communications from Chairmanand his fellow FOMC policymakers. Typically, higher yields weigh on gold by raising the “opportunity cost” of holding non-yielding assets.
Gold’s resilience speaks to the mood of a market that is unwilling to relinquish inflation protection at a time when the Russo-Ukraine war continues to rage and the subsequent impact on the global economy is not yet known. The only thing that everyone currently agrees upon is the fact that the war and resultant Western sanctions on Russia are going to be inflationary.
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