Gold price (XAU/USD) maintains stability amidst geopolitical tensions and a weaker US Dollar, finding support amid rising concerns in the Middle East. The yellow metal is currently trading below the key $2,040-$2,042 supply zone in the early European session.
Despite the supportive factors, a decisive upward move for gold is elusive due to diminishing expectations of a more aggressive Federal Reserve (Fed) policy easing. Strong US macro data, signaling a resilient economy, and hawkish comments from several Fed officials, advocating against premature interest rate cuts, have shifted market expectations.
The persistent strength in US Treasury bond yields, supported by the positive economic outlook, acts as a deterrent for substantial gains in gold, given its non-yielding nature. Traders are exercising caution, refraining from aggressive positions ahead of key events such as the flash global PMIs, Advance US Q4 GDP, and the US Core PCE Price Index later in the week.
Additionally, the upcoming European Central Bank (ECB) policy decision on Thursday is anticipated to introduce volatility to the markets, potentially influencing short-term trading opportunities for gold. In the interim, the release of the Richmond Manufacturing Index, coupled with US bond yields, USD dynamics, and broader risk sentiment, could offer momentum to the precious metal on Tuesday.
