Gold Price Forecast: XAU/USD holds key 20-day EMA above $3,350, US-Iran tensions escalate

LONDON (June 23) Gold price (XAU/USD) exhibits a sluggish performance above $3,350 during European trading hours on Monday. The precious metal trades slightly lower even though tensions between the United States (US) and Iran have escalated after Tehran vows to retaliate for striking three nuclear facilities, which was aimed to dismantle country’s ambitions.

A report from the Bloomberg showed last week that senior US officials are preparing for a possible attack on Iran as soon as the weekend, aiming to restrict Tehran from building nuclear warheads.

During the European trading session, the new head of Iran’s military, Major General Amir Hatami, said every time Americans have committed crimes against Iran, they’ve received a decisive response, and it will be the same this time, Fars news agency reported.

Theoretically, heightened geopolitical tensions improve demand for safe-haven assets, such as Gold. However, upbeat US Dollar (USD) has capped the Gold price’s upside. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, refreshes three-week high around 99.40. Technically, higher US Dollar makes Gold an expensive bet for investors.

Meanwhile, a slight increase in US bond yields has also weighed on the Gold price. 10-year US Treasury yields rose 0.4% to near 4.39%. Higher yields on interest-bearing assets diminish demand for non-yielding assets, such as Gold.

US Treasury yields rise even though Federal Reserve (Fed) Governor Christopher Waller has argued in favor of reducing interest rates in the July policy meeting, cited concerns over the labor market outlook. “The Fed should not wait for the job market to crash in order to cut rates," Waller said.

FXStreet