Gold prices (XAU/USD) showed strength during the early European session on Tuesday, buoyed by a decline in the US Dollar (USD). Market sentiment suggests limited downside for the precious metal, as traders increasingly anticipate a US Federal Reserve (Fed) interest rate cut in September following lackluster US employment data last week.
Moreover, cautious market sentiment amid political uncertainties in France and geopolitical tensions in the Middle East is bolstering Gold, a traditional safe-haven asset.
However, the upward momentum of Gold prices may face challenges due to the People’s Bank of China’s (PBoC) decision to refrain from purchasing Gold for the second consecutive month in June. Market participants will closely monitor Fed Chair Jerome Powell’s semi-annual Congressional testimony, as well as speeches from Fed officials Michael Barr and Michelle Bowman. Additionally, Thursday’s release of the US Consumer Price Index (CPI) inflation data is expected to be pivotal for market direction.
