Gold Rises Toward $4,070 As Falling US Yields Support Bullion

Gold price registers gains of 0.58% as Washington pauses attacks on Tehran, while US President Donald Trump opened the door for a resumption in negotiations. This, along with falling US Treasury yields, is a tailwind for Bullion prices with XAU/USD approaching $4,070.

XAU/USD holds gains on lower Treasury yields, Iran de-escalation hopes

Sentiment has improved during the day as news that a Chinese state-backed firm is producing chipmaking machines pushed US equities lower. In the precious metals segment, the yellow metal clings to gains, though XAU/USD is nearly back to the $4,050 area, which could open the door for further downside.

Geopolitics continued to play a role in the financial markets. Over the weekend, the White House paused attacks, adding to the market's positive mood. Also, US President Donald Trump said that Iran wants to meet, and that they’re meeting and added that “there’s a chance we can make a deal with Iran.”

Data in the US revealed that Durable Goods Orders in June improved but fell short of estimates. Nevertheless, traders' eyes are on the Federal Reserve's (Fed) monetary policy decision on Wednesday, followed by a busy economic docket on Thursday.

Money markets had priced in a 60% chance that the US central bank would keep rates unchanged and a slim 40% chance of a 25-basis-point rate hike, according to Prime Terminal data.

On Thursday, the US schedule will feature the release of Gross Domestic Product (GDP) figures for the second quarter, the final print of the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index, and Initial Jobless Claims data.

In the meantime, Bullion prices recovered as US Treasury yields are edging lower. The US 10-year T-note falls 3.5 basis points (bps) to 4.645%. As of writing, the Greenback turned green as depicted by the measure of a basket of six currencies against the American currency, aka the US Dollar Index (DXY).

Oil prices fell 6% to hit a one-week low after the US and Iran paused strikes over the weekend following two weeks of attacks, raising hopes of a diplomatic solution that would de-escalate the conflict and allow shipping to resume in the Strait of Hormuz.

In June, China's net Gold imports through Hong Kong more than doubled from the same month last year but were down by over 5% from May, according to data from Hong Kong's Census and Statistics Department released on Monday.

XAU/USD technical outlook: Gold trades sideways despite posting gains

Gold’s price action projects that some consolidation lies ahead. Momentum, as measured by the Relative Strength Index (RSI), shows some mixed signs. The index remains bearish but is closing into the 50 neutral level, which, once pierced, turns bullish.

For a bullish resumption, the XAU/USD must clear the $4,100 mark. Above lies the July 22 daily high at $4,165, which, once surpassed, clears the way toward the July 6 daily peak at $4,202. A breach of the latter exposes the 50-day Simple Moving Average (SMA) at $4,221.

On the downside, the first key support is the daily low of July 24 at $4,022. Beneath are the psychological $4,000 mark, followed by the June 17 daily low of $3,959.