XAUUSD clings to gains near $1,860 amid falling yields

New York (May 24th) Gold prices are heading back towards the highest levels in two weeks, as bulls continue to draw support from the falling US Treasury yields across the curve.

Risk-aversion remains at full steam, accentuated by the weak Eurozone and the UK business PMIs, which drives the haven demand into the US government bond. This, in turn, weighs down on the Treasury yields, aiding the upside in the non-yielding gold.

Moreover, the bright metal also capitalizes on a broadly subdued US dollar. The greenback came under renewed selling pressure after the EUR/USD pair rebounded sharply on the latest hawkish comments from ECB President Christine Lagarde. The dollar is keeping its corrective mode intact ahead of Wednesday’s FOMC May meeting’s minutes.

Brewing geopolitical tensions between the US and China over Taiwan is also boding well for the traditional safe-haven gold. US President Joe Biden maintains its commitment of getting militarily involved to defend the self-governed island claimed by China. When asked if there had been any change to the policy after remarks on Monday, Biden said "No."

Attention now turns towards US Manufacturing and Services PMIs due later in the NA session for fresh cues on risk sentiment and the dollar dynamics.

FXStreet