The price of gold (XAU/USD) experienced a downturn on Thursday, driven by the strength of the US Dollar (USD) and higher US yields. Investors are closely monitoring the Federal Reserve’s stance, with diminishing expectations of a rate cut in September contributing to selling pressure on the precious metal due to increased opportunity costs.
Market sentiment is particularly influenced by the upcoming release of the second estimate of US Gross Domestic Product (GDP) for Q1 2024. A stronger-than-expected reading could further bolster the USD and dampen demand for gold, which is priced in USD. However, geopolitical tensions in the Middle East are providing some support to gold prices as investors seek safe-haven assets amidst uncertainty.
Additionally, the ongoing demand from central banks is expected to mitigate the downside risk for gold in the near term, despite the prevailing market dynamics.
The gold market remains complex and dynamic, with various factors including economic data, geopolitical events, and monetary policy expectations influencing price movements. Investors are advised to stay vigilant and informed amid this evolving landscape.
