GOLD PRICE ADVANCES BACK CLOSER TO WEEKLY TOP, UPSIDE POTENTIAL SEEMS LIMITED

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  • Gold price attracts some haven flows in the wake of geopolitical tensions in the Middle East.
  • Hawkish FOMC minutes remain supportive of elevated US bond yields and cap further gains.
  • A sustained move beyond the 50-day SMA should pave the way for additional near-term upside.

Gold price (XAU/USD) edges higher during the Asian session on Thursday, albeit remains below the 50-day Simple Moving Average (SMA) pivotal resistance, around the $2,032 area, or over a one-week high touched the previous day. The Middle East conflict continues to underpin demand for traditional safe-haven assets, which, along with a weaker US Dollar (USD), acts as a tailwind for the precious metal. The uptick, however, lacks bullish conviction in the wake of firming expectations that the Federal Reserve (Fed) will keep interest rates higher for longer.

The bets were reaffirmed by hawkish FOMC meeting minutes released on Wednesday, which showed that policymakers were concerned about cutting interest rates too quickly. This, along with a weak 20-year bond auction, triggered a sell-off in the US debt market and pushed the yield on long-term US government bonds to their highest level in almost three months. This might hold back traders from placing aggressive bullish bets around the non-yielding Gold price and cap the upside, warranting caution before positioning for an extension of a one-week-old uptrend


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