Gold prices (XAU/USD) experienced a downward correction after reaching the $2,049-2,050 range, sliding towards the lower end of the daily range in the early European session on Thursday. The surge in the US Dollar (USD) to its highest point since December 13, following the Federal Reserve’s (Fed) less dovish stance on interest rates, acted as a significant headwind for the precious metal.
The Fed’s less accommodative outlook has intensified the appeal of the US Dollar, impacting commodities like gold that typically move inversely to the greenback. Despite the pullback, gold retains some resilience, supported by geopolitical tensions in the Middle East and concerns about China’s economic challenges.
While the prospect of heightened military actions in the Middle East could offer a safe-haven boost to gold prices, the ongoing decline in US Treasury bond yields serves as a mitigating factor, potentially limiting the downside for the non-yielding yellow metal.
Market focus now turns to the flash Eurozone Consumer Price Index (CPI) release, the Bank of England’s (BoE) policy decision, and upcoming US macroeconomic data for potential market-moving cues. Traders are keenly observing these events for fresh insights into the global economic landscape and their potential impact on gold prices.
