Gold traded flat on Monday as rising US Treasury yields and expectations that Israel will refuse to escalate the conflict with Iran put further pressure on the XAU/USD pair.
Although the XAU/USD was up 0.31% over the past 24 hours to 2,351, it is down significantly from Friday, when it traded at 2,426.
Meanwhile, US June gold futures fell 0.22% to $2,368.
The US dollar is consolidating but is still stable amid an escalation in the military conflict between Iran and Israel, FX Street reports.
Iran's aerial drone and missile attack on Israeli territory on Saturday revived safe-haven demand for gold as markets fear the conflict between the two countries will escalate into a regional conflict. Israeli media reported that Tel Aviv was preparing a serious response to Iran's unprecedented attack. However, the US urged the Israeli authorities not to respond to the massive Iranian attack, as the destruction of 99% of Iranian drones and missiles is already a major victory for Israel.
Gold was also supported by the weakening US dollar. The dollar's decline is due to traders' reluctance to take new positions in the US currency due to its possible overvaluation, despite the rise in US Treasury yields.
According to experts, the rise in US Treasury yields is primarily due to a change in expectations about the timing of interest rate cuts by the Federal Reserve after the release of economic data from the United States.
CME's FedWatch data showed that the markets are now pricing with a 63.5% probability that the Federal Reserve will hold rates steady at its June meeting, up from 46.8% the previous week.
However, a renewed interest in risky assets as fears of an escalation of military conflict in the Middle East subside could trigger a fresh wave of selling in gold. Therefore, all the attention of traders and investors is now focused on the Middle East in search of clues for gold trading.
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