During the early European session on Monday, gold prices (XAU/USD) struggled to make significant headway, hovering below the $2,330 level in a narrow trading range. Traders exhibited caution, refraining from aggressive directional bets amidst uncertainty surrounding the Federal Reserve’s (Fed) future interest rate cuts, resulting in subdued price action.
Last Friday’s key US inflation data reinforced market expectations of Fed rate cuts in September and December. However, recent hawkish comments from influential Federal Open Market Committee (FOMC) members indicated a reluctance within the central bank to expedite rate reductions.
Moreover, the US Dollar (USD) extended its corrective pullback from a two-month high post-US PCE data, providing some support to gold prices. Geopolitical tensions and uncertainty stemming from France’s surprise snap election outcome also bolstered gold’s safe-haven appeal.
Concerns over potential aggressive tariffs under a Trump presidency raised inflation fears, prompting US Treasury bond yields to reach multi-week highs. This development posed a ceiling on substantial gains for the non-yielding yellow metal.
The interplay of these factors underscores the intricate dynamics influencing gold prices amid economic uncertainties and central bank policy considerations. Traders remain vigilant for further cues from economic data releases and geopolitical developments, which could shape gold’s near-term outlook.
