Gold prices (XAU/USD) maintain their upward momentum for the third consecutive day, currently hovering just below a nearly one-month peak reached in the previous session. On Thursday, released data indicated a potential easing of inflationary pressures in the United States, fueling expectations of future rate cuts by the Federal Reserve (Fed) later in the year. This development is perceived as a significant catalyst, acting as a supportive tailwind for the non-yielding precious metal.
Despite the positive trend in gold prices, there is a lack of bullish conviction in the market. This is attributed to the growing consensus that the US central bank is likely to postpone any decision on lowering borrowing costs until the June policy meeting. The prevailing hawkish outlook continues to bolster elevated US Treasury bond yields, providing support for the US Dollar (USD), which remains steadfast near its weekly peak. Consequently, these factors act as limiting forces on the gains witnessed in the gold market, especially in the context of the prevalent risk-on sentiment.
Nevertheless, gold prices are poised to record gains for the second consecutive week, as investors turn their attention to crucial US macroeconomic data scheduled for the start of the new month. The ISM Manufacturing PMI, set to be released later today, holds particular significance. Friday’s US economic calendar also includes the revised Michigan Consumer Sentiment Index. Additionally, insights from Federal Reserve speeches will contribute to shaping the trajectory of the USD and exert influence on the XAU/USD pairing.
