The price of gold (XAU/USD) faced challenges in gaining momentum during the Asian session on Monday, hovering near a three-week low reached on Friday. A mix of conflicting factors has contributed to this lackluster performance.
One significant factor impacting gold is the growing consensus that the Federal Reserve (Fed) will commence interest rate cuts later this year. This belief, fueled by indications of easing inflationary pressures in the United States (US), has exerted downward pressure on the US Dollar (USD). Consequently, gold, as a safe-haven asset, has found some support amidst lingering geopolitical uncertainties.
However, the upside potential for gold remains limited due to an overall positive risk sentiment in the markets, coupled with hopes for a potential cease-fire in Gaza. Additionally, traders appear hesitant and are awaiting the release of crucial US economic data scheduled for the beginning of the week, notably the Nonfarm Payrolls (NFP) report on Friday. Moreover, the upcoming central bank events, particularly the Bank of Canada (BoC) decision on Wednesday and the European Central Bank (ECB) meeting on Thursday, are expected to impact the movement of the non-yielding precious metal.
Overall, the gold market remains influenced by a complex interplay of economic indicators, central bank policies, and geopolitical developments, which are likely to shape its trajectory in the near term.
