Gold prices (XAU/USD) reached a one-week high during early European trading on Thursday, driven by anticipation of recapturing the pivotal resistance at the 50-day Simple Moving Average (SMA). Recent US macroeconomic data suggest easing inflationary pressures and a slowing economy, leading to speculation that the Federal Reserve (Fed) may cut interest rates twice this year. This prospect has significantly bolstered demand for the non-yielding yellow metal.
Geopolitical tensions and renewed political uncertainty in Europe have further supported gold’s safe-haven appeal. Despite the Fed’s more hawkish stance last week, with policymakers favoring only one rate cut in 2024, the yellow metal continues to find buyers. Additionally, a rebound in US Treasury bond yields has sparked renewed demand for the US Dollar (USD), potentially limiting further gains for XAU/USD.
In summary, while gold’s upward momentum is fueled by economic and geopolitical factors, the strengthened USD and rising bond yields may temper its ascent. Investors will closely monitor upcoming economic indicators and Fed policy signals for further direction.
