• Gold price exhibits strength as geopolitical tensions keep safe-have demand firm.
• The US Dollar corrects amid fears that inflation will remain stubborn in other developed nations.
• Fed Mester is confident about policy normalisation but cautioned that it should not be done in a hurry.

Gold price (XAU/USD) rebounds to $2,380 in Thursday’s European session after posting losses on Wednesday. The precious metal holds gains amid fears that Middle East tensions could worsen and spread beyond Gaza if Israel responds brutally to Iran.

According to The Times, Israel’s Prime Minister Benjamin Netanyahu has clarified that “their state will do everything necessary to defend itself,” according to The Times. The comments from PM Netanyahu came after his conversation with foreign ministers from the United Kingdom and Germany.

The recovery in Gold is also driven by a decline in US Treasury yields, which are influenced by the Federal Reserve’s (Fed) interest rate outlook. 10-year US bond yields edge down to 4.57% from a more than five-month high of 4.70%. Lower yields on interest-bearing assets diminish the cost of holding non-yielding assets such as Gold.