Gold prices stabilised to a certain extent after their rebound this week. A softer US dollar could help reduce pressure on the metal.
The US currency retreated after the US administration reiterated its intent to maintain the ceasefire in the Middle East despite recurring incidents with Iran.
The rhetoric could also keep a lid on oil prices, alleviating inflation concerns and pulling Treasury yields down.
The latter could limit the impact on non-yielding assets like gold. Overall, a prolonged weakness in the dollar and a more consistent retreat in Treasury yields could help the metal move beyond its current range and return to an uptrend.
In this regard, attention remains on monetary policy in major economies, where interest rates are expected to remain unchanged in the US and rate hikes are anticipated in the euro area and the UK. A shift to a more restrictive policy could weigh on gold and limit the potential for a recovery. At the same time, the market continued to benefit from ongoing long-term central bank purchases, which could support the market.
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