The gold price (XAU/USD) extended its positive momentum for the fifth consecutive day on Tuesday, reaching a fresh three-month peak around the $2,120 region during the first half of the European session. The precious metal’s upward trajectory is driven by a combination of factors, including anticipation of a Federal Reserve (Fed) rate cut, ongoing geopolitical tensions, and concerns about a Chinese economic slowdown.
Traders are closely monitoring signals about the Fed’s monetary policy, and attention is particularly focused on Fed Chair Jerome Powell’s two-day congressional testimony, scheduled to begin on Wednesday. The growing consensus that the Fed might initiate rate cuts in June has kept the US dollar bulls on the defensive, providing strong support to non-yielding gold.
Geopolitical uncertainties and worries about a slowdown in China have contributed to a risk-averse market sentiment, reflected in a generally weaker tone in equity markets. This risk aversion, coupled with the expectation of a softer USD, has bolstered the appeal of the safe-haven XAU/USD.
Looking ahead, the market will be influenced by upcoming US macroeconomic data, with the monthly employment data, including the highly anticipated Nonfarm Payrolls (NFP) report scheduled for release on Friday. Traders will closely assess these economic indicators for further cues on the direction of the US dollar and potential implications for gold.
While the current focus remains on short-term opportunities, the broader fundamental backdrop suggests that the path of least resistance for gold is to the upside. Any corrective slides are likely to attract buying interest given the prevailing market conditions and uncertainties.
