During the Asian session on Wednesday, the Gold spot price (XAU/USD) faced fresh selling pressure, retracing some of the overnight gains and hovering closer to the $2,040-$2,042 supply zone. The precious metal, however, remains within a multi-day trading range as market participants await clarity on the Federal Reserve’s (Fed) stance regarding interest rate cuts.
The ongoing consolidation is driven by the lingering uncertainty over when the Fed will initiate rate cuts, with traders closely monitoring key US macro releases scheduled for this week. The focus shifts to the flash PMIs later in the day, followed by the Advance Q4 GDP on Thursday and the Personal Consumption Expenditures (PCE) Price Index on Friday.
Investors have tempered their expectations for an early Fed rate cut, given the resilience of the US economy. Comments from several Fed officials emphasizing the need for more inflation data before making any decisions on interest rates have contributed to the scaling back of rate-cut expectations. This has bolstered the US Dollar (USD), reaching its highest level since December 13, and is considered a significant factor dampening the appeal of gold.
Despite these factors, geopolitical tensions and concerns about slowing economic growth in China continue to underpin the safe-haven appeal of XAU/USD. The delicate balance between these opposing forces underscores the cautious stance among traders navigating the gold market amidst ongoing uncertainties.
