During the Asian session on Monday, the price of gold (XAU/USD) exhibited a range-bound movement, consolidating its recent surge towards the $2,200 level, a record high reached on Friday. The spike in the US unemployment rate in February, reaching a two-year high, has reinforced expectations that the Federal Reserve (Fed) will initiate interest rate cuts in June. This has kept US Treasury bond yields suppressed, preventing the US Dollar from capitalizing on its recovery from mid-February lows and acting as a tailwind for the non-yielding precious metal.
Despite the ongoing rally, bullish traders appear cautious about entering new positions around gold, given the extremely overbought conditions on the daily chart. The upcoming release of the latest US consumer inflation figures on Tuesday adds another layer of uncertainty, as it is expected to play a crucial role in shaping expectations regarding the Fed’s potential rate-cut trajectory. This, in turn, will influence USD demand and could provide fresh momentum to the non-yielding gold.
While awaiting the inflation data, the prevailing sentiment of caution in the market, combined with Fed rate cut expectations, is likely to continue supporting the safe-haven XAU/USD, potentially limiting any corrective slide in the near term. Traders and investors are closely monitoring these factors as they navigate the evolving dynamics of the gold market.
