During the European session on Tuesday, the price of gold (XAU/USD) traded in negative territory, retracing a portion of the previous day’s recovery from a three-week low around the $2,315-$2,314 range. Despite this decline, the downside appears to be cushioned by growing expectations of a Federal Reserve (Fed) interest rate cut later in the year, reinforced by disappointing US macroeconomic data on Monday. As a result, the US dollar (USD) has weakened, reaching a near two-month low, which is expected to provide continued support for the non-yielding precious metal.
Furthermore, ongoing geopolitical risks contribute to the positive near-term outlook for gold and validate the potential for further price appreciation. Consequently, any subsequent declines in the gold price are likely to be viewed as buying opportunities and may remain limited. Traders may also adopt a cautious approach and wait for other significant US macroeconomic releases later in the week, including the Nonfarm Payrolls (NFP) report scheduled for Friday.
Additionally, key central bank events, such as the Bank of Canada (BoC) decision on Wednesday and the European Central Bank (ECB) meeting on Thursday, could provide momentum to XAU/USD and help determine its near-term trajectory.
