- Gold price is encountering renewed selling pressure, partially reversing the gains made during Thursday’s trading session.
- Optimism surrounding a potential trade agreement between the United States and China remains a significant impediment to the appeal of the safe-haven commodity.
- Expectations of further interest rate reductions by the Federal Reserve are keeping downward pressure on the US Dollar, which should provide some support and limit losses for gold amidst ongoing geopolitical uncertainties.
The gold price (XAU/USD) is extending its gradual intraday decline throughout the first half of the European trading session on Friday, slipping back below the $3,200 level in recent trading. The prevailing optimism regarding a potential resolution to trade tensions between the US and China continues to diminish the demand for traditional safe-haven assets, preventing the precious metal from capitalizing on the previous day’s robust recovery from the $3,120 region, which represented a more than one-month low.
Weaker-than-anticipated US macroeconomic data released on Thursday reinforced expectations for additional interest rate cuts by the Federal Reserve (Fed), leading to a further decrease in US Treasury bond yields. The recent Producer Price Index (PPI) data, for example, came in below expectations, adding to the narrative of a potentially slowing economy. This development is keeping the US Dollar (USD) on the defensive for the second consecutive day. However, the weaker dollar is failing to provide substantial support to the non-yielding gold price. Even persistent geopolitical risks, including ongoing tensions in Eastern Europe and the Middle East, are proving insufficient to significantly counter the prevailing bearish sentiment surrounding the XAU/USD pair. Market analysts are closely watching upcoming consumer sentiment data and inflation figures for further clues about the Fed’s future monetary policy decisions, which could significantly impact gold prices in the near term. The market is pricing in a high probability of at least one more rate cut before the end of the year, but the timing and magnitude remain uncertain.
