Gold prices (XAU/USD) continued their upward trajectory for a second consecutive day on Thursday, reaching a two-week high around the $2,375 mark during the European session. The precious metal’s near-term outlook remains bullish as investors speculate that major central banks will reduce borrowing costs to stimulate economic growth.
On Wednesday, the Bank of Canada (BoC) lowered its benchmark interest rate for the first time in four years, signaling concerns over slowing economic growth by cutting rates from a more than two-decade high. Similarly, the European Central Bank (ECB) is anticipated to reduce interest rates at the conclusion of its June policy meeting later today, marking the first such move since March 2016.
Market sentiment is also leaning towards an imminent rate cut by the Federal Reserve (Fed), driven by signs of a decelerating US economy. These expectations have kept US Treasury bond yields suppressed near their lowest levels in over two months, hindering the US Dollar’s (USD) ability to build on its modest recovery over the past two days. Persistent geopolitical tensions, particularly ongoing conflicts in the Middle East, are further boosting Gold’s appeal as a safe-haven asset.
Despite these supportive factors, the potential for further gains in XAU/USD appears constrained as traders await the US Nonfarm Payrolls (NFP) report due on Friday. The data is expected to provide more clarity on the US economic outlook and the Fed’s future monetary policy actions.
