• Gold trades at $2,645, down 0.30%, as US 10-year Treasury yields rise to 4.026%, capping further upside.
• Middle East conflict escalation involving Israel, Hamas, and other groups like Houthis supports Gold amid risk-off sentiment.
• Market expectations of a 25 bps Fed rate cut remain high at 83.5%, while a 50 bps cut is off the table for now.

Gold price edges down during Monday’s North American session, yet it remains within the $2,630 - $2,659 range as US Treasury bond yields capped the yellow metal advance, while the escalation of the Middle East conflict keeps the precious metal from falling further. The XAU/USD trades at $2,645, losses 0.30%.

Market mood has deteriorated due to the war in the Middle East. The exchange of fire prolonged as Israel continued its ground operations in Lebanon, while Hamas launched rockets at Tel-Aviv. Ceasefire hopes faded as the conflict broadened, involving other groups like Houthis attacking ships in the Red Sea.

In the meantime, the latest US stellar Nonfarm Payrolls report in September sparked a jump in US Treasury bond yields.

Traders disregarded a 50 basis point (bps) cut by the Federal Reserve (Fed), according to CME FedWatch Tool data. The odds for a 25 bps Fed rate cut are 83.5%. Meanwhile, the chances of lowering rates by 50 bps are 0%, but they increased to 16.5% for a hold.