Gold retreated on Monday as it faced a firm dollar and a rebound in bond yields.
Ongoing tensions in the Middle East could continue to support demand for the US dollar as a clear diplomatic resolution remains elusive, weighing on the metal.
At the same time, elevated energy prices could continue to fuel inflation risks and drive bond yields to the upside as a result.
Similarly, central banks are expected to maintain a cautious monetary policy stance. Markets continue to expect the Federal Reserve to keep rates unchanged, while the European Central Bank is widely expected to tighten policy further, which could maintain pressure on non-yielding assets, including gold.
Looking ahead, investors will continue to monitor geopolitical developments and upcoming economic data releases in both the United States and Europe for clues on the future path of monetary policy. Despite near-term headwinds, ongoing central bank purchases continue to provide a supportive long-term foundation for gold, which could limit downside risks.
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