In the unfolding market scenario, the price of gold (XAU/USD) exhibited a positive upturn on Thursday, albeit maintaining its position below the $2,040-2,042 supply zone. This zone represents the upper boundary of a multi-day range as the European session approaches. Despite the rebound, the precious metal remains in proximity to the nearly three-week low reached on Monday, influenced by dwindling expectations of a more aggressive policy easing by the Federal Reserve (Fed).
The ongoing repositioning trade activities ahead of the release of crucial US consumer inflation figures are contributing to downward pressure on the US Dollar (USD). This, in turn, is providing support to the commodity.
Furthermore, geopolitical tensions arising from the Israel-Hamas conflict, coupled with concerns regarding a sluggish recovery in China, are serving as stabilizing factors for the safe-haven gold prices. Concurrently, investors are recalibrating their strategies in light of reduced expectations for a Fed rate cut in March, given the robust resilience demonstrated by the US economy. This resilience is reflected in elevated US Treasury bond yields, which, in turn, may discourage fresh bullish positions on the non-yielding yellow metal.
Market participants are exercising caution and opting to wait on the sidelines in anticipation of key US economic data. This data is expected to provide insights into the Fed’s future stance on interest rates, influencing the market sentiment surrounding gold prices.
