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The Gold Index XAU/USD rallies on Tuesday, benefiting from concerns over the US debt ceiling and slowing Chinese manufacturing activity.
Falling US Treasury bond yields support gold prices despite strong US Dollar. Eyes are focused the upcoming US CPI data, which has the potential to impact gold prices. Gold price is printing back-to-back bullish days as the precious metal meanders nearby Monday’s high of $2029.40, bolstered by falling US Treasury bond yields despite a strong US Dollar.
Gold is underpinned by uncertainty around the US debt ceiling and a US inflation report looming. At the time of writing, the XAU/USD is trading around $2036, above its opening price by 0.74%. The negative tone is being reflected by Wall Street registering losses.
Worries about the debt ceiling are weighing on market sentiment. Credit conditions in the United States (US) began to tighten, as shown by the Fed’s Senior Loan Officer Opinion Survey (SLOOS), though not as disastrous as many doomsayers had feared.
Another reason that bolstered appetite for XAU/USD was that China’s revealed that manufacturing activity slowed down. At the same time, its Trade Balance showed that Exports and Imports dropped from 14.8% to 8.5% in April and from -1.4% to -7.9%, respectively.
On Tuesday, US President Joe Biden will host US Congress officials to lay the ground around getting a consensus on the US debt ceiling. The US Dollar Index climbs 0.29%, up at 101.680, capping gold’s rally. US Treasury bond yields are mixed, though the short term, the most sensitive to interest rates, the 2-year note gains one bps, at 4.024%.
