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Gold Price Rallies as US Dollar Slips and Volatility Ticks Up. Higher XAU/USD?

The gold price bounced hard off a seven-month low to start this week in the aftermath of the outbreak of war in the Middle East, trading back above US$ 1,860 a troy ounce.

The perceived haven status of the precious metal helped to underpin but it has also seen the tailwinds of a weaker US Dollar with Treasury yields reversing the gains seen last week.

The benchmark 10-year bond eclipsed 4.88% on Friday, the highest return for the low-risk asset since 2007.

It has since collapsed below 4.65% this week after dovish comments from Federal Reserve Vice Chair Philip Jefferson and the Dallas Fed President Lorie Logan.

Somewhat ironically, both central bankers cited higher long-end Treasury yields as a reason to be less hawkish going forward. The interest rate market has now pretty much ruled out another hike by the Fed and sees a cut by the middle of next year.

Recent moves have seen volatility pick up for gold as measured by the GVZ index. This may suggest that further notable moves in the gold price might evolve.

Source: dailyfx