Gold prices soar to a new all-time high past the $3,500 figure on Tuesday, rallying more than 2% even though the US Dollar advances and US Treasury yields rise. Risk aversion dominates, despite forecasts of a potential Federal Reserve (Fed) rate cut in September. XAU/USD trades above the $3,520 figure, after bouncing off daily lows of $3,470.

Bullion hits fresh all-time high at $3,530 despite stronger Dollar and surging US Treasury yields
Market mood is downbeat, hence favoring flows toward the yellow metal, which cleared April's 22 peak of $3,500 and hit a record high at $3,530, poised to reach higher prices.

Factors such as uncertainty around US policy, Fed independence threats and an increase in flows to Gold ETFs, are the drivers of Tuesday's session. Data-wise, mixed Manufacturing Purchasing Managers Index (PMIs) readings revealed by S&P Global and the Institute for Supply Management (ISM) prompted investors to buy the precious metals instead of US equities.

In the FX space, the Greenback is advancing and US Treasury yields are also surging as fixed income traders are demanding a higher premium across the whole curve, though they are more focused on the belly and long end of the yield curve.

Meanwhile, traders are awaiting August's US Nonfarm Payroll figures on Friday. An upbeat report could trigger a retracement of Gold prices as traders reassess the possible outcome of the Fed holding rates unchanged, instead of a cut.

Source: Fxstreet