Gold price (XAU/USD) has recorded a second consecutive day of positive trading on Thursday. Despite this, the upward movement lacks strong conviction, with the precious metal still positioned below the crucial $2,040-2,042 supply zone as the European session unfolds. Investor sentiment appears cautious as they await the release of key US inflation data. A modest decline in the US Dollar (USD) provides some support for the safe-haven gold.
Traders are exercising caution as they await more clarity on the Federal Reserve’s (Fed) stance on interest rates. There is a growing consensus that the Fed will maintain higher interest rates for an extended period, contributing to the capped upside in gold prices.
The focus of market participants remains on the upcoming release of the US Personal Consumption Expenditures (PCE) Price Index. This data is expected to play a pivotal role in influencing USD price dynamics and determining the short-term trajectory of gold, given its status as a non-yielding asset.
Traders are refraining from making aggressive directional bets as they await further cues regarding the Fed’s rate-cutting strategy. The current market sentiment, combined with hawkish Fed expectations, suggests a cautious approach in positioning for a potential extension of the recent recovery from the year-to-date low. Investors will closely monitor developments, with the upcoming US inflation data likely to sway gold prices in the immediate future.
