The gold price (XAU/USD) showed limited movement in the Asian session on Tuesday, failing to capitalize on the modest gains from the previous day. The precious metal is trading within a narrow range as several influential Federal Reserve officials attempted to push back against market expectations for early interest rate cuts in 2024. This stance is viewed as a significant headwind for gold, as higher interest rates can make non-yielding assets less attractive.
Despite the recent dovish turn by the Federal Reserve, which projected an average of three 25 basis points rate cuts in 2024, the gold price faces resistance from the underlying bullish sentiment in global equity markets. The risk-on sentiment in equities tends to limit the upside for safe-haven assets like gold.
However, geopolitical tensions in the Middle East present a potential risk that could prevent significant downward pressure on gold. Traders are also likely to exercise caution and await key economic data, particularly the Core PCE Price Index scheduled for release on Friday, to make informed decisions. The Core PCE Price Index is a crucial indicator of inflation in the United States and can influence market expectations regarding the Fed‘s monetary policy.
