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Gold retreats as US dollar, yields climb; Fed speakers on tap Dollar hits more than one-month high

Now, as we delve into the nuanced world of financial happenings, we observe the retreat of gold in the face of a resurgent US dollar and climbing yields on Treasury bonds. The dollar, soaring to heights unseen in over a month, exerts pressure on gold prices. Concurrently, the 10-year Treasury yields in the U.S. stand firm above the 4% mark. The financial stage anticipates insights from various Federal Reserve figures throughout the week, offering a more profound understanding of the central bank’s trajectory in monetary policy.

At 0958 GMT, spot gold experienced a 0.7% dip, settling at $2,041.09 per ounce, while U.S. gold futures followed suit with a 0.3% decline, reaching $2,045.00.

Analyzing the market dynamics, Ricardo Evangelista, a senior analyst at ActivTrades, remarked, “Examining the market landscape, the prevailing narrative centers on the robustness of the U.S. dollar, which is adversely affecting gold prices.” He added, “While I perceive some support for gold slightly above the $2,000 threshold, the current scenario doesn’t portend much upward movement, given the strengthening U.S. dollar and the ascending treasury yields.”

The dollar index (DXY) witnessed a 0.5% ascent, reaching a pinnacle not witnessed in over a month. This surge renders bullion less enticing for holders of other currencies, accentuated by the climb in yields on the benchmark U.S. 10-year Treasury notes (US10Y), surpassing the 4% threshold.

Scheduled to articulate his thoughts on the economic landscape before the Brookings Institution at 1600 GMT, Fed Governor Christopher Waller emerges as a focal point, alongside at least six other officials set to speak throughout the week.

Giovanni Staunovo, an analyst at UBS, forecasts, “Fed officials are likely to maintain a neutral stance, leaving all possibilities open based on incoming data. For gold prices to witness an uptick, we must remain on a trajectory aligned with a soft landing.”

The consensus in the financial realm anticipates the U.S. central bank to maintain its policy rate stability at the conclusion of its Jan. 30-31 meeting. Traders presently ascertain a 70% probability of an interest rate reduction come March, according to the CME Fedwatch tool. The allure of non-yielding bullion intensifies in the face of lower interest rates.

On a divergent note, European Central Bank authorities resist the market’s expectations for swift rate cuts in the current year.

Meanwhile, spot silver (XAGUSD1!) witnessed a 0.5% descent to $23.09 per ounce, platinum (PL1!) experienced a 1.4% decline to $902.51, and palladium (XPDUSD1!) slipped 1.9% to $953.38.