Prices of gold (XAU/USD) plunge to five-month lows as the dollar strengthens and Treasury yields rise.

The strong U.S. dollar and rising Treasury yields cause gold to reach 5-month lows.
Despite eleven rate increases, the Fed is still dedicated to reducing inflation.
Demand for (XAU/USD) is impacted by the 10-month high U.S. Treasury yields.

Gold’s price dropped to its lowest level in five months due to rising U.S. dollars and Treasury yields, confirming Federal Reserve policy tightening. The Fed’s July meeting focused on fighting inflation, but concerns about rate hikes persist, potentially requiring further monetary tightening.

Treasury yields reached a 10-month high, causing the dollar to rise to mid-June levels. The Fed meeting minutes suggested rate increases, potentially leading to rate increases. The dollar and yield strength increased, but spot gold showed tentative stability today.

Gold (XAU/USD) faces the risk of a sharp break if $1893.07 breaks, potentially causing a fall due to rising rates and a strong dollar. The dollar index and US yield determine market sentiment, potentially signalling a turning point. Analysts predict fluctuating gold prices.

Gold’s potential rise depends on interest rate reductions in 2024, as investor interest decreases during uncertain economic times, despite positive U.S. data.

short-term outlook
Gold prices have hit five-month lows due to a resurgent dollar and Treasury yields, supported by positive economic data. The Federal Reserve’s cautious stance on inflation and rate hikes have shaped the market environment. Rising yields pressure gold, but potential rate cuts in 2024 may spur a recovery.

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