Gold (XAU/USD) prices attracted dip-buyers during early European trading on Monday, partially recovering from the retracement slide following a two-week high last Friday. Despite the Federal Reserve’s hawkish stance, forecasting only one rate cut in 2024, markets continue to anticipate the possibility of two rate cuts this year due to signs of easing inflationary pressures. This outlook has put downward pressure on US Treasury bond yields, while a softer risk tone, along with geopolitical tensions and political uncertainty in Europe, lends support to the safe-haven commodity.
On the other hand, stronger-than-expected US Purchasing Managers’ Index (PMI) data released on Friday indicate a resilient economy, helping the US Dollar (USD) to extend last week’s positive momentum and reach its highest level since May 9. This strength in the USD has capped further gains for gold prices.
Traders remain cautious, preferring to wait on the sidelines ahead of key US macroeconomic releases this week, including the final Q1 GDP print and the Personal Consumption Expenditures (PCE) Price Index. Additionally, comments from influential Federal Open Market Committee (FOMC) members will be closely monitored for short-term trading opportunities.
