- Gold price edges lower as indications of a potential thaw in US-China trade relations diminish safe-haven appeal.
- The US Dollar partially recovers from its overnight decline, adding downward pressure on the XAU/USD pairing.
- Expectations of Federal Reserve rate cuts may provide a ceiling for the US Dollar, potentially mitigating losses for the commodity amidst ongoing geopolitical uncertainties.
The gold price (XAU/USD) continued its gradual intraday decline through the Asian trading session on Tuesday, nearing the $3,300 level once again. This movement reflects diminished demand for safe-haven assets as market participants grow more optimistic about a possible de-escalation of trade tensions between the United States and China. Furthermore, renewed buying interest in the US Dollar (USD) is contributing to the shift in investment flows away from the precious metal. However, a confluence of factors is preventing a more significant drop, allowing gold to remain comfortably above the critical support zone of $3,265-3,260.
Market participants remain cautious, closely monitoring developments related to US trade policies under President Donald Trump and the persistence of geopolitical risks across various regions. These factors contribute to an underlying level of uncertainty that supports gold prices to some extent. Moreover, expectations for a more dovish monetary policy stance from the Federal Reserve (Fed), potentially involving further interest rate cuts, are likely to restrain any substantial appreciation of the US Dollar. This, in turn, could limit the downside for the non-yielding gold price. Market participants may also be hesitant to take strong directional positions ahead of key US macroeconomic data releases scheduled for this week. The highlight of the week will be the release of the Nonfarm Payrolls (NFP) report on Friday, which will provide further insights into the health of the US labor market. The NFP data is expected to show the addition of approximately 200,000 jobs, with the unemployment rate holding steady at 3.6%. Any significant deviation from these expectations could trigger substantial volatility in both the currency and commodity markets.
