On Wednesday, the price of gold (XAU/USD) experienced a downturn as some sellers entered the market. The potential for further gains in the precious metal appears limited, primarily due to the Federal Open Market Committee (FOMC) minutes being interpreted as notably more hawkish compared to previous releases. This hawkish sentiment from the US Federal Reserve signals a cautious approach towards maintaining its restrictive monetary policy for an extended period, consequently bolstering the strength of the US Dollar and exerting downward pressure on gold prices.
Market participants, particularly gold traders, are closely monitoring key economic indicators for potential impacts on gold prices. The upcoming release of the preliminary reading of the US Manufacturing and Services Purchasing Managers Index (PMI) for May is anticipated to have a significant influence. A weaker-than-expected reading in these indices could reignite hopes for potential Federal Reserve rate cuts, providing support for gold prices.
Furthermore, geopolitical tensions, uncertainties in global markets, and persistent inflation concerns continue to underpin demand for the precious metal and may act as a buffer against further downside in the near term. Investors are also keeping a close eye on other economic data releases, including the Chicago Fed National Activity Index, weekly Initial Jobless Claims, New Home Sales figures, and remarks from Federal Reserve officials like Bostic, as these factors could provide further insights into the direction of monetary policy and subsequent impacts on gold prices.
