Yields

As the trading week continues to unfold, the lack of direction dominating gold price action remains a relevant theme in the short term. In fact, the average move over the last three trading sessions has resulted in a decline of barely 1.0%, highlighting that neither buyers nor sellers have been able to take control in a consistent manner.

Short-term price action around the Japanese yen has started to show some relative improvement over recent sessions. This can be seen in the recent performance of USD/JPY, which has now recorded three consecutive daily declines in favor of the Japanese currency, resulting in a depreciation of roughly 0.35% over the period.

As the trading week comes to an end, weakness around gold price action remains evident in the short term. This can be seen in the performance of the past two sessions, where the metal has declined by approximately 0.3%. Although the move has not been particularly aggressive, it highlights that buying pressure continues to struggle to regain control of the market.

The Canadian dollar continues to face one of its most challenging environments in recent months when it comes to maintaining strength against the U.S. dollar. The weakness of the Canadian currency is clearly reflected in USD/CAD, which has now recorded nine consecutive bullish sessions and gained more than 1.7% during that period.

During today’s session, and despite the release of the Federal Reserve minutes, gold managed to hold above the $4,500 per ounce area and posted a gain of more than 1.3%. However, this recovery is still not strong enough to erase the selling bias that has been in place since previous sessions, when price started to pull back from the $4,700 area.

The US 30-year Treasury yield briefly climbed to 5.20% today, its highest level since 2007, before retreating modestly alongside softer oil prices. But the broader trend remains troubling. Before the escalation of the US-Iran war, markets had been moving steadily towards a softer inflation outlook, with markets pricing in further easing of US monetary policy. But roughly three months later, yields soared due to a substantial repricing and all to do with the closure of the Strait of Hormuz.

The trading week has not been entirely favorable for gold in the short term, as the metal closed the final session of the week with a decline of more than 2.5%. The price is now moving closer to the reference area of $4,500 per ounce, once again highlighting a relevant selling bias in the short term.

At the start of the week, EUR/USD has shown a significant decline, falling more than 1% in the short term, with price action clearly favoring the US dollar. The strong selling pressure emerging in the pair is mainly driven by the renewed escalation of geopolitical tensions in the Middle East.

US dollar surges as GDP and inflation revisions lift yields, forcing shorts to cover. DXY rebound, COT data, and key FX moves shape trader sentiment.

While tech stocks soar, the bond market tells a different story. The US 30-year Treasury yield has risen above 5%, which, if sustained, could potentially trigger risk-off sentiment across markets.

With US yields lower and hinting at a swing high, the relationship between AUD/USD and the AU-US 2-year spread appear to be back on talking terms. And that could bode well for AUD/USD bulls if US yields continue to fall in line with my bias.

The combination of tariff fatigue, extended moves and a refreshing set of softer CPI figures helped appetite for risk peel itself from the ropes it had been pinned to in recent weeks. And that helped AUD/USD rise for a second day and USD/CAD fall below resistance, while EUR/USD bulls paused for breath around a key high.