Gold prices surge on sliding T-Yields, Middle East tensions

Gold prices surged over 1.5% on Monday as US Treasury yields retreat ahead of key CPI data, with the 10-year yield down to 3.902%. The ongoing Middle East tensions, with no ceasefire in sight, drive demand for Gold’s safe-haven status.

Traders are bracing for the latest Consumer Price Index (CPI) report for July, which is expected to show an improvement in the disinflation process. The XAU/USD trades at $2,467 after bouncing off a daily low of $2,423.

Market sentiment shifted sour amid ongoing developments in the Middle East, with Israel, Lebanon, and Iran’s lack of efforts to reach a ceasefire agreement keeping market participants uneasy. This triggered a flight to Gold’s safe-haven status due to a possible escalation of the conflict.

US Treasury bond yields edged lower with the 10-year benchmark note rate down four basis points (bps) to 3.902%, ahead of the release of inflation data. Federal Reserve Governor Michele Bowman was neutral, saying that some progress on inflation is welcome, according to data from the last two months.

The economic calendar will feature the release of US inflation figures on Tuesday and Wednesday, followed by Retail Sales data on Thursday and Friday’s University of Michigan (UoM) Consumer Sentiment. Gold’s uptrend extended on Monday, with prices approaching the $2,470 figure ahead of the all-time high (ATH) of $2,483, which could be tested if inflation comes lower than foreseen. Momentum favours buyers, as reflected by the Relative Strength Index (RSI), which is above the neutral line aiming higher.