In the early European session on Thursday, the price of gold (XAU/USD) struggled to gather significant momentum, consolidating recent robust gains that propelled it to its highest level since May 5th. The previous day witnessed a notable surge, but traders exhibited caution, opting to await crucial inflation data from the United States (US) before committing to fresh directional positions.
Market participants are eyeing the release of the US Personal Consumption Expenditures (PCE) Price Index later in the North American session. Anticipation surrounds the potential impact of this data on the Federal Reserve’s (Fed) forthcoming policy decisions, subsequently influencing demand for the US Dollar (USD) and providing a significant catalyst for the non-yielding precious metal.
Prior to the imminent data release, some repositioning trades have supported the Greenback’s modest recovery from its lowest level since August 11. Concurrently, a positive sentiment prevailing in US equity futures poses a challenge for gold, traditionally considered a safe-haven asset.
It’s noteworthy that a prevailing sentiment is emerging, suggesting that the Fed has concluded its policy-tightening initiatives and could potentially initiate rate cuts as early as March 2024. This sentiment might temper any substantial upward movement for the US Dollar. Coupled with concerns over China’s economic challenges, this scenario lends support to the XAU/USD, mitigating potential downward pressure.
As traders navigate these dynamics, the gold market remains poised for potential shifts contingent on the unfolding economic indicators and central bank decisions in the coming sessions.
