Gold prices (XAU/USD) experienced a downturn on Wednesday, snapping a three-day winning streak as the Greenback staged a modest rebound. The resurgence of the US Dollar was fueled by hawkish comments from several Federal Reserve officials and stronger-than-expected US economic data, which reduced expectations of a Fed rate cut in September. This upward pressure on the USD weighed on the USD-denominated gold price.
However, amidst the economic uncertainties and geopolitical tensions, demand for safe-haven assets like gold remains a driving force. The continued demand from central banks is also expected to support higher gold prices in the near term.
Gold traders are closely monitoring key events, including the release of the Fed’s Beige Book and a speech by Fed official John Williams on Wednesday. Additionally, all eyes will be on the US Core Personal Consumption Expenditures Price Index (Core PCE) data set to be released on Friday. Analysts project a 0.3% month-on-month increase and a 2.8% year-on-year increase in April. Any indications of persistently high inflation in the US could lead to speculation about delaying a Fed rate cut, potentially exerting downward pressure on gold prices as higher interest rates would increase gold’s opportunity costs.
In summary, while short-term fluctuations in gold prices may occur due to currency movements and economic data releases, the broader trend remains influenced by geopolitical uncertainties and central bank demand, which are expected to provide support for gold prices in the coming days.
