- Gold price is finding it difficult to maintain upward momentum after briefly exceeding the $3,400 level.
- The Federal Reserve’s recent hawkish stance is providing support for the US Dollar, thereby limiting gains for the non-yielding gold.
- Improved market sentiment is adding further pressure on the XAU/USD pair as investors await comments from former President Trump.
The price of gold (XAU/USD) is experiencing renewed selling pressure after an initial rise to the $3,414-3,415 area during the Asian trading session, subsequently falling back to the lower end of its daily range in recent trading. The Federal Reserve’s decision on Wednesday to maintain a hawkish outlook is providing a base for US Treasury bond yields and the US Dollar (USD). This, coupled with an overall positive attitude toward risk assets, is creating headwinds for gold, which offers no yield. However, several factors suggest a degree of caution is warranted before anticipating a significant continuation of the commodity’s decline from the two-week high reached on Tuesday. Market participants are also closely monitoring upcoming economic data releases, including inflation figures and employment reports, which could influence the Federal Reserve’s future policy decisions and, consequently, the direction of gold prices.
Comments from former US President Donald Trump have dampened expectations for a swift resolution to the trade dispute between the United States and China, as he indicated a lack of urgency to finalize any agreements. Moreover, ongoing geopolitical uncertainties arising from the conflict between Russia and Ukraine, instability in the Middle East, and heightened military tensions along the India-Pakistan border are expected to provide underlying support for gold as a safe-haven asset. The market also appears to be exhibiting caution in anticipation of Trump’s press conference scheduled for 14:00 GMT. Analysts suggest that any unexpected remarks or policy announcements could trigger volatility in financial markets, potentially impacting gold prices. Furthermore, the strength of the US Dollar and prevailing interest rate expectations will continue to play a crucial role in determining the overall trajectory of gold in the near term.
