Following Thursday’s record high, gold prices have entered a consolidation phase. A slight recovery in the USD and improved risk appetite are tempering gains amid overbought conditions. Underlying support for XAU/USD stems from ongoing concerns regarding US-China trade relations, recessionary pressures, and expectations of future Federal Reserve rate cuts. Intraday selling pressure has emerged as the prevailing positive risk sentiment diminishes demand for safe-haven assets. The modest USD rebound from multi-year lows is also contributing to the downward pressure. However, significant corrective declines are unlikely given the persistent uncertainties surrounding US trade policy, the escalating US-China trade dispute, and global recession anxieties. Market expectations for a resumption of Fed rate cuts in June, with at least three reductions anticipated this year, are likely to limit aggressive USD buying and provide support for gold. Therefore, confirmation of a near-term top requires substantial follow-through selling. Market participants are now awaiting US macroeconomic data and Federal Reserve commentary for short-term trading opportunities. The current market dynamic reflects a pause in bullish momentum as safe-haven demand recedes.
