Gold (XAU) Price Forecast: Rising Treasury Yields Threaten Gold’s Bullish Momentum

Gold Prices Near Record Level with Focus on Treasury Yields and Dollar

Gold prices edged higher on Tuesday, holding close to last week’s all-time high of $2,758.53 per ounce. This resistance level has become a focal point for traders, as surpassing it could trigger significant upward momentum. Prices have maintained a steady position within a $49.77 range, suggesting a potential breakout if the range consolidates.

The current market sentiment remains bullish, with prices staying above a minor pivot at $2,733.64, while $2,758.53 remains the immediate resistance. A break above this level would support the bullish trend, while a dip below $2,708.76 could signal weakening.

At 11:07 GMT, XAU/USD is trading $2750.29, up $7.97 or +0.29%.

Rising Treasury Yields Add Pressure on Gold Prices

Though a rate cut remains likely, rising Treasury yields are tempering gains in gold. The 10-year Treasury yield exceeded 4.3% on Tuesday as investors look to upcoming economic data for insights into the U.S. economy’s strength. Higher yields can detract from gold’s appeal, as they provide more attractive returns to fixed-income investors, contrasting with gold’s non-yielding nature. As yields and dollar strength continue to play significant roles in gold’s short-term direction, traders will monitor these closely.

Stable Dollar’s Role in Supporting Gold Market

On Tuesday, gold prices have also been influenced by a relatively steady U.S. dollar. The dollar has recently pulled back from three-month highs, coupled with rising U.S. election concerns, which has supported gold demand. Fed rate cut expectations and political uncertainty around the election have further bolstered gold’s appeal as a safe-haven asset, giving bulls optimism for a potential rally.

Federal Reserve Policy and Upcoming Economic Data in Focus

The Federal Reserve’s upcoming rate decision, due on November 7, will be crucial in shaping gold’s path forward. Market expectations lean heavily toward a 25-basis-point cut, with CME’s FedWatch Tool indicating a 97% probability.

This week’s U.S. economic data—including job openings, ADP employment data, and the core personal consumption expenditures (PCE) price index—will offer insight into the Fed’s likely stance. Lower interest rates generally benefit gold by reducing the opportunity cost of holding a non-yielding asset, enhancing its appeal as a hedge against economic instability.

Gold Market Forecast

The near-term outlook for gold remains cautiously bullish, provided prices hold above the key support at $2,733.64 and approach the critical resistance at $2,758.53. Key factors, including the Fed’s decision and upcoming data, will influence the direction of interest rates and inflation expectations.

Should the dollar remain steady and rate cut expectations persist, gold could challenge the $2,800 level. However, elevated Treasury yields may limit the upside, creating a potentially volatile but opportunistic environment for traders.