- Gold price experiences significant selling pressure for the third consecutive day, influenced by a confluence of factors.
- Emerging indications of reduced tensions between the United States and China, coupled with a modest strengthening of the US Dollar, are weighing on the precious metal’s appeal.
- Expectations of aggressive interest rate cuts by the Federal Reserve are likely to constrain the US Dollar’s upside potential, thereby mitigating losses for the XAU/USD pair.
The price of gold (XAU/USD) is extending its downward trajectory for the third straight session, falling to a two-week low in the vicinity of $2,321 during Thursday’s Asian trading hours. The ongoing signs of de-escalation in trade relations between the United States and China – the world’s two dominant economies – are diminishing the demand for traditional safe-haven investments, placing downward pressure on the price of gold. Adding to this pressure, the US Dollar (USD) has risen to a two-week high, further diverting investment flows away from the commodity and contributing to the intraday decline. The ICE U.S. Dollar Index (DXY), which tracks the dollar’s value against a basket of six major currencies, climbed to levels not seen in weeks, reflecting increased investor confidence in the U.S. economy relative to its peers.
However, the unexpected contraction in the US Gross Domestic Product (GDP), as indicated by recent economic data, and emerging signs of moderating inflationary pressures are reinforcing market expectations for a more aggressive easing of monetary policy by the Federal Reserve (Fed). The latest GDP figures showed a decline of [Insert Actual GDP Contraction Percentage Here]%, surprising economists who had anticipated a more robust performance. This development is likely to cap any substantial appreciation of the USD and provide support for the non-yielding gold price. Furthermore, the persistent uncertainty surrounding US President Donald Trump’s trade policies and economic agenda should help to limit the downside for the XAU/USD pair in the lead-up to key US macroeconomic data releases scheduled for the beginning of the new month. Investors will be closely watching the upcoming releases of the Non-Farm Payrolls (NFP) report and the Consumer Price Index (CPI) to gain further insights into the health of the US economy and the Fed’s likely course of action. These data points will be crucial in determining the near-term direction of both the US Dollar and the price of gold.
