XAU/USD is trading negatively around $2,430 during the early Asian session on Monday, pressured by a modest recovery in the US Dollar (USD). However, the downside might be limited due to heightened geopolitical tensions in the Middle East.
Tensions in the region continue to support the XAU/USD bid. On Sunday, Defence Minister Yoav Gallant informed US Defence Secretary Lloyd Austin of Iran’s military preparations for a large-scale strike on Israel, as reported by Axios writer Barak Ravid on X, citing a source familiar with the call.
This escalation is likely to boost safe-haven flows into gold, providing support for the precious metal amid heightened volatility and geopolitical risks. “In the medium term, the outlook for gold remains positive, with any dips likely to be short-lived due to underlying macroeconomic factors,” said Zain Vawda, a market analyst at MarketPulse by OANDA.
Investors are divided on the US Federal Reserve’s (Fed) next move regarding monetary policy, speculating between a 50 basis point (bps) interest rate cut or a 25 bps cut. Key US economic data releases this week, including the US Producer Price Index (PPI), Consumer Price Index (CPI), and Retail Sales, might offer insights into economic conditions. Stronger-than-expected data could delay or reduce the likelihood of deeper Fed rate cuts, which could weigh on the gold price.
