The gold price (XAU/USD) showed resilience during the Asian session on Monday, holding steady after a modest pullback from last week’s levels around $2,050. The Federal Reserve’s dovish pivot, signaling an end to its monetary policy tightening cycle and hinting at potential rate cuts in 2024, initially failed to support the US Dollar (USD). Despite top Fed officials attempting to temper speculation about early interest rate cuts on Friday, the USD recovery did not significantly impact gold.
Geopolitical risks and concerns about a deeper economic downturn, especially in China and the Eurozone, continue to act as a tailwind for the safe-haven precious metal. The prevailing risk-on environment, supported by China’s optimistic outlook from the Central Finance Office, has contributed to a positive tone in equity markets, potentially limiting significant upside for gold in the short term.
While the absence of relevant market-moving economic releases from the US may contribute to a stable gold price, the overall risk sentiment and reactions to geopolitical events will play a crucial role in shaping the precious metal’s near-term trajectory. Despite attempts to balance the dovish Fed stance, uncertainties and global economic concerns are likely to provide a cushion for the downside of the gold price.
