Gold (XAU) rallied on Tuesday as the trade war spurred demand for the yellow metal due to its safe-haven appeal. Upbeat United States (US) jobs data was ignored by traders, who continued to pile on Bullion. XAU/USD is trading at $2,917, up over 1%.
Sentiment has recently improved as Canada and the US de-escalated the threat of imposing tariffs. Concerns about an economic slowdown in the US exert downward pressure on US Treasury yields and the Greenback, which is a tailwind for Bullion prices.
Meanwhile, Trump's trade tariffs on aluminum and steel imports will go into effect on Wednesday. The US Bureau of Labor Statistics (BLS) revealed that job openings rose in February.
Breaking news from Saudi Arabia revealed that Ukraine is ready to accept a ceasefire proposal, US Secretary of State Marco Rubio revealed. Ukraine's President Volodymyr Zelenskyy added, "It is up to the US now to convince Russia to agree on a ceasefire."
This could be a headwind for Gold prices, which tend to climb due to high geopolitical tensions and recessionary fears.
Meanwhile, XAU/USD traders eye the release of the Consumer Price Index (CPI) in the US on Wednesday, followed by the release of the Producer Price Index (PPI) on Thursday.
Gold price unfazed by high US yields
The US 10-year Treasury bond yield recovers and edges up six basis points to 4.282% as traders eye the Fed's interest rate cuts.
US real yields, as measured by the US 10-year Treasury Inflation-Protected Securities (TIPS) yield that correlates inversely to Gold prices, climb five-and-a-half basis points to 1.963%, a headwind for the non-yielding metal.
The Atlanta Fed GDP Now model predicts the first quarter of 2025 at -2.4%, which would be the first negative print since the COVID-19 pandemic.
The US JOLTS report showed that job openings rose to 7.740 million in January, up from 7.508 million, surpassing expectations of 7.63 million, signaling continued strength in the labor market.
The People's Bank of China (PBoC) continues to purchase Gold, according to the World Gold Council (WGC). The PBoC increased its holdings by 10 tonnes in the first two months of 2025. However, the largest buyer was the National Bank of Poland (NBP), which increased its reserve by 29 tonnes, its largest purchase since June 2019, when it bought 95 tonnes.
Money market traders had priced in 77.5 basis points of easing in 2025, up from 74 bps last Friday, via data from Prime Market Terminal.
Source: Fxtreet
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