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Gold Prices Dip as Yields Rise

Gold rally

Gold prices have retreated on Tuesday following a recent surge, influenced by improving risk sentiment and a rebound in bond yields. Investors are eagerly awaiting the release of U.S. inflation data scheduled for later this week.

Spot Gold: Earlier in the day, spot gold reached $1,865.19 per ounce, its highest level since September 29, before settling down 0.2% at $1,856.68 as of 1032 GMT. U.S. Gold Futures: U.S. gold futures saw a 0.3% increase, reaching $1,870.20.

Middle East Tensions Boosted Gold Demand

On Monday, gold experienced its most significant single-day gain in five months, rising by approximately 1.6%. This surge was attributed to heightened demand for safe-haven investments amid military clashes between Israel and the Palestinian Islamist group Hamas.

Read More: Oil Rebound As Market Pauses Amid Israel-Hamas Conflict Uncertainty

Craig Erlam, Senior Markets Analyst at OANDA, commented, “Markets remain responsive to further signs of escalation and further events that unfold over the coming days. But for now, it seems that markets have settled down.”

Gold is currently facing resistance at the $1,865 mark. Some initial profit-taking is occurring after two positive days for gold rally, driven by risk aversion and the Federal Reserve’s balanced commentary, according to Erlam.

Stocks Rebound Amidst Dovish Fed Comments

European stocks made a strong rebound on Tuesday, thanks to dovish remarks from U.S. Federal Reserve policymakers and a drop in oil prices, which helped ease investor concerns.

Craig Erlam, a senior markets analyst at OANDA, remarked, “Markets remain responsive to further signs of escalation and further events that unfold over the coming days. But for now, it seems that markets have settled down.”

On a different front, European stocks witnessed a robust rebound today. Dovish comments from U.S. Federal Reserve policymakers and a decline in oil prices contributed to calming investor nerves.

Market Volatility Persists On Gold rally

However, the ongoing military conflict in the Middle East continues to pose a threat of volatility for investors. This adds to the uncertainty ahead of the corporate earnings season and the crucial U.S. Consumer Price Index data set to release on Thursday. These events could shed light on the Federal Reserve’s future rate-hike plans.

Fed’s Perspective on Yields

Fed Vice Chair Philip Jefferson and Dallas Fed President Lorie Logan noted on Monday that the recent surge in yields may diminish the need for further interest rate hikes. With benchmark 10-year Treasury yields rising to 4.6737%, the appeal of non-yielding bullion has decreased.

Looking ahead, Kyle Rodda, a financial market analyst at, pointed out, “In the longer run, U.S. rates will be the bigger driver, and yields are broadly very positive, which is unfavorable for gold rally.”

In the precious metals market, spot silver declined by 0.8% to $21.72 per ounce, platinum slipped 0.3% to $883.30, and palladium dropped 0.8% to $1,131.16.

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