The price of gold (XAU/USD) experienced a slight retreat from its recent all-time peak, hovering around the $2,354 mark earlier this Monday. Despite this pullback, the precious metal managed to maintain a positive stance during the first half of the European trading session. This marks the ninth day out of the previous ten characterized by a positive trajectory, largely fueled by expectations that the Federal Reserve (Fed) will initiate rate cuts in 2024.
The recent surge in gold prices has been significantly bolstered by substantial buying activity from the Chinese central bank over the past couple of weeks. However, the metal’s rally has encountered resistance amidst a generally optimistic sentiment prevailing in equity markets. This optimism is partly attributed to the easing of geopolitical tensions in the Middle East, which has curbed further gains for gold, especially considering the overextended conditions depicted on the daily chart.
On the other hand, the US Dollar (USD) continues to draw strength from the robust US Nonfarm Payrolls (NFP) report released on Friday. The positive NFP data prompted investors to recalibrate their expectations regarding the Federal Reserve’s monetary policy stance, reducing the likelihood of aggressive rate cuts. Moreover, hawkish remarks from Dallas Fed President Lorie Logan have reinforced elevated US Treasury bond yields, providing additional support to the US Dollar and exerting pressure on the non-yielding gold price.
Market participants appear cautious and prefer to await further guidance on the Fed’s future rate-cutting trajectory before making significant positioning adjustments. As such, focus remains directed towards key events scheduled for this week, including the release of US consumer inflation figures and the minutes from the Federal Open Market Committee (FOMC) meeting on Wednesday. These developments are anticipated to offer valuable insights into the Fed’s policy outlook, potentially influencing the next directional move in gold prices.
