US President Joe Biden's decision to authorize Ukraine to use long-range American missiles against military targets inside Russia prompted some haven flows and benefited the Gold price on Monday.
The US Dollar extended its profit-taking slide from the year-to-date high touched last week on the back of retreating US Treasury bond yields and provided an additional boost to the XAU/USD.
The precious metal attracts some follow-through buying for the second straight day on Tuesday, though reduced bets for more aggressive rate cuts by the Federal Reserve might cap the upside.
US President-elect Donald Trump's incoming administration is expected to focus on lowering taxes and raising tariffs, which could stoke inflation and limit the Fed's ability to ease monetary policy.
A slew of influential FOMC members, including Fed Chair Jerome Powell, recently suggested caution in cutting rates, which, in turn, favors the USD bulls and should cap the non-yielding yellow metal.
Tuesday's US economic docket features the release of Building Permits and Housing Starts. Adding to this, a speech by Kansas Fed President Jeffrey Schmid will drive the USD later during the US session.
The focus, however, will remain glued to manufacturing and service sector PMI data on Friday, which could offer early cues on how companies are reacting to the threat of Trump's proposed trade tariffs.
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