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Gold prices rallied on Tuesday, driven by concerns over a surge in US debt issuance and the potential impact on interest rates. The market is closely watching a series of large US Treasury bond auctions this week, particularly the 10-year and 30-year bonds. Fears are mounting that the high volume of debt could necessitate higher interest rates to attract investors.
Adding to market anxiety are ongoing discussions surrounding potential US tariffs, despite recent reassurances from President-elect Trump.
Key Market Movements:
US Yields Rise: The 10-year US Treasury yield climbed to nearly an eight-month high, reflecting growing concerns about inflation and the potential for higher interest rates.
Fed Rate Cut Unlikely: The market currently assigns a low probability to a Federal Reserve interest rate cut in January, with the focus shifting towards data-dependent policy decisions.
European Inflation: Rising inflation in Europe could complicate the European Central Bank’s plans for an interest rate cut.
US Economic Data: Key economic data releases this week include the JOLTS Job Openings report and the ISM Services PMI, which will provide further insights into the US economy.
Technical Outlook:
Gold prices are currently trading within a pennant formation, indicating potential for a breakout in either direction.
Gold prices are poised for a potential breakout, with the market closely monitoring US debt issuance, interest rate expectations, and geopolitical developments. While concerns over tariffs persist, a clear bullish trigger for gold has yet to materialize
