The price of gold (XAU/USD) has shown signs of recovery on Thursday, marking a pause to its two-day descent below the psychological $2,000 level and rebounding from the previous day’s one-month low. The precious metal has managed to sustain modest gains in the early European session, benefitting from a flight to safety driven by geopolitical tensions and concerns about China’s economic outlook.
Despite a slight downturn in the US Dollar (USD), which has provided additional support to gold, the intraday uptick lacks strong bullish conviction. Geopolitical uncertainties and apprehensions about China’s economic performance have contributed to the renewed interest in safe-haven assets.
The positive traction in gold comes after upbeat US Retail Sales data released on Wednesday, indicating a resilient economy. However, the Federal Reserve (Fed) now faces less pressure to implement interest rate cuts, supporting the notion of keeping rates higher for a more extended period. This has led to elevated US Treasury bond yields, acting as a tailwind for the USD and capping significant upside potential for the non-yielding gold price.
Market participants are now turning their attention to the US economic docket, where events such as Initial Jobless Claims, the Philly Fed Manufacturing Index, housing market data, and a speech by Atlanta President Raphael Bostic are expected to provide further impetus and direction for gold trading. Traders remain cautious and are likely to wait for sustained follow-through buying before confirming a near-term bottom for XAU/USD and considering further upward movements.
