Gold prices (XAU/USD) reversed a two-day decline during Monday’s European session, driven by weaker-than-expected US employment reports that have increased expectations of a Federal Reserve (Fed) rate cut in September. The decline in the US Dollar (USD) as a result of this speculation has lifted the USD-denominated gold.
The prospect of a rate cut in September has contributed to lowering the opportunity cost of investing in gold, thus boosting demand and price.
However, concerns over geopolitical tensions in the Middle East, particularly surrounding the Iran-Israel conflict, have somewhat eased, leading to a risk-on sentiment that may temper demand for safe-haven assets like gold and cap further upside in the yellow metal.
Gold traders will closely monitor statements from Federal Reserve officials (Fedspeak) this week. Fed’s Thomas Barkin and John Williams are scheduled to speak on Monday. Any dovish commentary from these officials could provide additional support to XAU/USD.
The movement of gold prices remains sensitive to shifts in market sentiment, economic data, and geopolitical developments, with investors closely watching for clues on future Fed policy decisions and global risk factors that could impact gold’s performance.
