During the Asian session on Wednesday, the price of gold (XAU/USD) continues to struggle to gain significant momentum, remaining within a familiar range around the 50-day Simple Moving Average (SMA). Market sentiment is increasingly leaning towards the expectation that the Federal Reserve (Fed) will delay any interest rate cuts until the June policy meeting. This sentiment revival strengthens demand for the US Dollar (USD) and acts as a hindrance for the non-yielding precious metal. Additionally, the recent surge in global equity markets, signaling a risk-on sentiment, further undermines the appeal of gold as a safe-haven asset.
However, factors such as the looming possibility of a US government shutdown and a decline in US Treasury bond yields could temper the enthusiasm of USD bulls, providing some support to gold prices.
Investors may also adopt a cautious stance and await the release of the US Personal Consumption Expenditures (PCE) Price Index on Thursday for insights into the Fed’s potential rate-cutting trajectory. This cautious sentiment could help limit the downside for XAU/USD, prompting investors to exercise prudence before confirming whether the recent rebound from multi-month lows has reached its peak.
