Gold Tests Range High as Oil Prices Drop, Bolstering Inflation Outlook
Press Hub UCapital
Share:
Gold Gains as Oil Declines
Gold (XAU/USD) climbed toward the $2,750 mark on Tuesday, responding positively to a sharp drop in Oil prices following Israel’s decision not to target Iranian oil facilities in recent military action. This geopolitical news brought Brent Crude down by 6%, easing global inflation concerns as energy costs decline. The prospect of moderated inflation keeps pressure on interest rates, enhancing Gold’s appeal as a non-yielding, inflation-resistant asset.
Middle East Tensions Support Gold’s Safe-Haven Appeal
Gold is also attracting investors as a safe-haven asset amidst ongoing Middle East conflicts and rising tensions in Ukraine. Reports of North Korean troop support for Russia are adding to market risk aversion, pushing Gold to the top of a short-term trading range.
Potential Resistance from Bond Yields and Stronger US Dollar
However, further gains for Gold may face challenges from rising US Treasury yields, which currently reflect heightened market caution ahead of the upcoming US presidential election. The US 10-year Treasury Note yield has increased to 4.302%, with similar rises in the 5-year and 3-month yields. This uptick has strengthened the US Dollar, potentially weighing on Gold’s upside as the precious metal is typically traded in USD.
Technical Outlook: Aiming for New Highs
Gold is testing the upper boundary of its mini range between $2,708 and $2,758, while remaining in a sustained uptrend across multiple timeframes. Should Gold break the $2,758 level, technical indicators suggest a potential continuation to the psychological $3,000 target. For now, Gold’s bullish outlook holds, driven by geopolitical uncertainty and a supportive inflation picture—though strength in the Dollar could temper gains.
Gold (XAU/USD) climbed toward the $2,750 mark on Tuesday, responding positively to a sharp drop in Oil prices following Israel’s decision not to target Iranian oil facilities in recent military action. This geopolitical news brought Brent Crude down by 6%, easing global inflation concerns as energy costs decline. The prospect of moderated inflation keeps pressure on interest rates, enhancing Gold’s appeal as a non-yielding, inflation-resistant asset.
Middle East Tensions Support Gold’s Safe-Haven Appeal
Gold is also attracting investors as a safe-haven asset amidst ongoing Middle East conflicts and rising tensions in Ukraine. Reports of North Korean troop support for Russia are adding to market risk aversion, pushing Gold to the top of a short-term trading range.
Potential Resistance from Bond Yields and Stronger US Dollar
However, further gains for Gold may face challenges from rising US Treasury yields, which currently reflect heightened market caution ahead of the upcoming US presidential election. The US 10-year Treasury Note yield has increased to 4.302%, with similar rises in the 5-year and 3-month yields. This uptick has strengthened the US Dollar, potentially weighing on Gold’s upside as the precious metal is typically traded in USD.
Technical Outlook: Aiming for New Highs
Gold is testing the upper boundary of its mini range between $2,708 and $2,758, while remaining in a sustained uptrend across multiple timeframes. Should Gold break the $2,758 level, technical indicators suggest a potential continuation to the psychological $3,000 target. For now, Gold’s bullish outlook holds, driven by geopolitical uncertainty and a supportive inflation picture—though strength in the Dollar could temper gains.