• XAU/USD lost more than 0.70% and challenges the $1,925 monthly low.
• Sour market mood amid PBoC rate cuts to limit Gold’s losses.
• Eyes on Chair Powell’s testimony before Congress on Wednesday.

The yellow metal traded with losses on Tuesday’s session, heading towards the $1,935 area despite a sour market mood following the People’s Bank’s of China (PBoC) rate cuts which fueled global economic downturn fears. In that sense, the US bond yields weakened across the board, but the US Dollar managed to hold its ground and hence weakened the XAU/USD pair.

Gold prices couldn’t capitalize on the sour market mood following PBoC's decision

During the Asian trading session, the People's Bank of China took a significant step by announcing a reduction in the benchmark Loan Prime Rates (LPRs) by ten basis points (bps). Moreover, the one-year LPR was cut from 3.65% to 3.55%, while the five-year LPR was lowered from 4.30% to 4.20%. These rate cuts served as a reminder to investors about the sluggishness observed in Chinese economic activity and fueled global economic downturn fears..

As a result, the US bond yields, which could be seen as the opportunity cost of holding Gold, lost ground. The 10-year bond yield retraced to 3.72%, the 2-year yield closed at 4.69% while the 5-year at 3.95%, all three with more than 1% declines.

Elsewhere, the US stock market weakened on Tuesday, as all three major indices closed in negative territory. The S&P 500 index (SPX) saw a 0.47% loss, the Dow Jones Industrial Average (DJI) a 0.72% loss, and the Nasdaq Composite (NDX) a 0.09% decline.

Investors are now shifting their focus to Jerome Powell's testimony before Congress during Wednesday's session, as they seek any hints or indications regarding the Federal Reserve's monetary policy next steps