XAU/USD: The key for gold are yields, not USD – HSCB

Matías Salord FXStreet

Analysts at HSBC believe that the near-term driver for gold is US Treasury yields. They consider COVID-19 concerns, monetary and fiscal stimulus support gold.

Key Quotes:

“Our precious metals analyst thinks a stronger USD could be a block for gold in the longer term. Normally, gold trades inversely with the USD. But for many months it has tended to trade directionally with the USD. We have submitted that this may be because investors are looking for safe havens and have moved into the USD, US Treasuries and gold simultaneously. If we enter a process of normalization, the USD and gold may revert to their more traditional inverse relationship. We think the USD is neither going to enter a bear or bull market, but will instead be firm which would present headwinds to gold rallies.”

“Currently, the key for gold is not the USD, our precious metals analyst believes, but yields. Gold has been sensitive to the US 10-year Treasury yield. The last drop in gold below USD1,700 per ounce earlier this month was accompanied by a jump in the US 10-year Treasury yield to 0.95%.”

“Gold can give up more ground near-term. But accumulated risks, combined with long-term stimulatory monetary and fiscal spending, will likely put a near-term floor on gold prices.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

GBP/USD extends the drop to 1.3360

GBP/USD builds on Monday’s decline and briefly clinches five-day lows near 1.3360 on Tuesday. Cable’s extra pullback follows the better tone in the Greenback as uncertainty in the Middle East prompts investors to adopt a cautious stance. Meanwhile, an apathetic UK labour market report also collaborates with the selling pressure on the British Pound.

EUR/USD looks inconclusive near 1.1420

EUR/USD trades in a tight range in the low 1.1400s on Tuesday, struggling to gain momentum amid an equally absence of clear direction in the US Dollar (USD). Uncertainty surrounding the US-Iran conflict is capping the pair’s upside, while traders avoid taking significant positions ahead of Thursday’s ECB gathering.

Gold shows signs of life; focus is back to $4,100

Gold gains ground on Tuesday, reversing Monday’s pessimism and advancing toward the $4,100 mark per troy ounce. Nevertheless, uncertainty surrounding the Middle East conflict and rising expectations for a hawkish Fed policy outlook are expected to limit the precious metal’s bullish momentum in the near term.

XRP extends recovery as on-chain activity grows

Ripple (XRP) ticks up and trades around $1.13 at the time of writing on Tuesday. This rebound aligns with a broader recovery in the cryptocurrency market, attributed to reports that mediators between the United States (US) and Iran are seeking a 10-day cessation of strikes to find a way back to the signed Memorandum of Understanding (MoU).

The Iranian war has again risen

The Iranian war has again risen to the top of the economics factor list. There is no end in sight. Intelligence experts say the current level of offense/retaliation will not change minds in Tehran, while in Washington, Trump fears all-out war, which would mean boots on the ground.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.