Gold (XAU/USD) price pops over 1% on Monday and hits $3,243 at the time of writing, with three main themes at play on Monday. Tensions are brewing in the Middle East with Israel embarking on another massive ground offensive. The military action comes just days after United States (US) President Donald Trump visited the Middle East, though he didn't visit Israel.
The second main driver is the bond market, where several pension funds and Fixed Income (Bonds) investors will need to reshuffle their holdings after rating agency Moody's downgraded the US's sovereign debt credit rating after the market closed on Friday.
In lowering the US rating from 'AAA' to 'Aa1', Moody's noted that successive US administrations had failed to reverse ballooning deficits and interest costs, BBC reports. This could have repercussions for the Federal Reserve(Fed) and US yields, where non-US parties will ask for higher rates in search of more guarantees before considering buying US debt.
The very last driver this Monday is rather a headwind for the precious metal. US President Trump last week torpedoed peace talks in Istanbul by saying at Air Force One that no deal was possible without himself and Russian President Vladimir Putin involved. Both presidents will have a phone call on Monday to discuss the matter, and could provide headwinds for Gold if a breakthrough is materializing.
Source: FXStreet
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