Gold prices remained stable on Tuesday, with a slight increase in XAU/USD prices due to a falling dollar and a rise in U.S. Treasury yields to their highest level since November 2007. The recovery is driven by the financial market’s anticipation of central bankers’ meeting on interest rate trajectory. A declining dollar has historically made dollar-denominated gold more desirable to foreign investors.

The sharp increase in 10-year Treasury yields is evidence that the market is growing more confident that U.S. interest rates will stay high for a considerable amount of time. The Federal Reserve’s outlook suggests a gradual rate hike in November, possibly followed by a rate cut in 2023. High interest rates often increase bond yields and strengthen the dollar, diminishing the appeal of non-yielding assets like gold.

The US dollar’s decline from its peak against other major currencies could trigger a strong uptrend in the gold market. Investors are closely monitoring the decrease in gold prices to determine when to re-enter the market. This break in the dollar’s uptrend and potential downward correction could be catalysts for a strong uptrend in the gold market.

Fed Chair Jerome Powell’s upcoming speech in Jackson Hole, Wyoming, is expected to determine the Federal Reserve’s interest rate voting. Powell is expected to applaud the Fed’s efforts to bring inflation closer to its objective, potentially reducing gold pressure due to interest rate concerns.

Outflows from SPDR Gold Trust, the biggest global ETF, show that gold-backed ETFs are no longer popular due to declining investor interest. This suggests a pessimistic outlook for gold in the near term.

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