Gold prices (XAU/USD) struggled to extend gains during the early European session on Friday, maintaining a narrow trading range. The precious metal had previously bounced from the weekly low of $2,009-$2,010 but faced challenges in building upward momentum. Traders exercised caution, choosing to stay on the sidelines as they awaited the release of the US Personal Consumption Expenditures (PCE) Price Index.
The PCE data is expected to offer insights into the potential timing of interest rate cuts by the Federal Reserve (Fed), impacting the trajectory of the US Dollar (USD) and influencing gold’s directional movement. The USD Index, tracking the Greenback against a basket of currencies, remained near its highest level since December 13. The prevailing sentiment suggests reduced expectations for a more aggressive Fed policy easing in 2024, creating headwinds for gold.
Despite the challenging environment for gold, a decline in US Treasury bond yields and ongoing concerns about geopolitical tensions in the Middle East provided some support to the safe-haven metal. Nevertheless, XAU/USD is poised to record losses for the second consecutive week, with market participants looking ahead to the upcoming Federal Open Market Committee (FOMC) meeting scheduled for January 30-31 for potential market-moving developments.
