- Gold prices have encountered selling pressure for the second consecutive session as safe-haven demand diminishes.
- A strengthening US Dollar is further weighing on the commodity, influenced by indications of de-escalating trade tensions.
- Expectations of Federal Reserve rate cuts could potentially restrain the US Dollar’s ascent and mitigate losses for the non-yielding precious metal.
Gold (XAU/USD) is maintaining a negative trajectory for the second day in a row, although it is managing to stay above the $2,300 level as trading commences in the European session on Wednesday. The prevailing optimism in global equity markets, fueled by signs of easing trade friction between the United States and China, coupled with the US President Donald Trump’s decision to offer flexibility on tariffs to US automakers, is contributing to the decline in safe-haven assets. This, alongside a slight appreciation of the US Dollar (USD), is proving to be a significant factor undermining demand for the safe-haven precious metal. Investors are closely monitoring upcoming economic data releases, including US inflation figures, which could influence the Federal Reserve’s monetary policy decisions and subsequently impact gold prices.
However, President Trump’s fluctuating stance on trade policies has been met with skepticism by investors, leading to a recent shift away from US assets. This uncertainty, combined with the increasing likelihood of more aggressive policy easing by the Federal Reserve (Fed) amid growing concerns about the economic repercussions of tariffs, is expected to continue to exert downward pressure on the USD. The market widely anticipates potential rate cuts in the coming months, with analysts closely scrutinizing economic indicators for further clues. This, in turn, provides some support to the non-yielding Gold price, limiting the potential for further declines and suggesting that bearish traders should exercise caution. Furthermore, geopolitical risks and ongoing global economic uncertainties could provide a floor for gold prices, preventing a significant sell-off.
