Gold Price Forecast: XAU/USD holds onto early losses near $4,630, US Yields plunge

Gold (XAU/USD) prices experienced a decline of 0.4% on Tuesday, trading near $4,630 during the European session. The precious metal experienced a correction after failing to extend its rally above $4,700 earlier in the day, as lower oil prices have negatively impacted US Treasury Yields. WTI Oil prices dropped 3% to near $82.00, reducing concerns of heightened inflation expectations and easing potential interest rate hikes from central banks.

Consequently, US 10-year and 30-year Treasury yields decreased by 0.6% and 0.55% respectively, reaching near 4.67% and 5.2%.

Investors are now focusing on the US Personal Consumption Expenditures (PCE) inflation data for July and the Jackson Hole Symposium outcome. In the chart, XAU/USD is trading at $4,637.77, holding a bullish near-term outlook above the 20-day exponential moving average ($4,387.61) and key Fibonacci retracement levels. The Relative Strength Index (RSI) is around 70.8, indicating overbought conditions with a potential for consolidation or a correction pause.

Gold has historically been a store of value, a medium of exchange, and a safe-haven asset in turbulent times. Central banks hold significant Gold reserves to support their currencies, with China, India, and Turkey increasing their Gold holdings in 2022. The US Dollar and Gold have an inverse correlation, meaning that when the Dollar depreciates, Gold tends to rise.

The precious metal is also inversely correlated with risk assets and tends to rise with lower interest rates. Factors such as geopolitical instability, recession fears, and the US Dollar's strength or weakness play a significant role in determining Gold prices.