During Tuesday’s European session, the gold price (XAU/USD) has slipped into negative territory, shedding part of the previous day’s recovery gains from the $2,315-$2,314 range, marking a three-week low. Despite this decline, expectations of a Federal Reserve (Fed) interest rate cut later this year have cushioned the downside. These expectations have been reinforced by disappointing US macroeconomic data released on Monday, which has dragged the US Dollar (USD) to a near two-month low, providing a supportive backdrop for the non-yielding yellow metal.
Persistent geopolitical risks also contribute to the near-term positive outlook for gold, suggesting potential for further appreciation. Consequently, any additional declines might be perceived as buying opportunities, likely limiting the extent of the downturn. Traders are exercising caution, opting to wait for key US macroeconomic releases later in the week, including the Nonfarm Payrolls (NFP) report on Friday.
In addition to US economic data, upcoming central bank events are expected to influence the XAU/USD. The Bank of Canada (BoC) decision on Wednesday and the European Central Bank (ECB) meeting on Thursday are critical events that could provide momentum and help shape the near-term trajectory of gold prices.
