During the early part of the European session, the price of gold (XAU/USD) has retained its robust bid tone, currently hovering around the $2,210 area, just shy of a recent record high reached earlier on Thursday. The continued weakness in the US Dollar (USD) following the Federal Reserve’s (Fed) projection for three 25 basis points (bps) interest rate cuts this year has bolstered demand for the non-yielding yellow metal. Additionally, geopolitical tensions stemming from the prolonged Russia-Ukraine conflict and ongoing strife in the Middle East have further supported the safe-haven appeal of gold.
However, an uptick in US Treasury bond yields has acted as a mitigating factor, limiting further losses for the USD. Furthermore, a generally positive risk sentiment in the market may deter bullish traders from initiating fresh positions on gold, particularly considering slightly overbought conditions.
Nevertheless, the fundamental backdrop remains favorable for bullish traders, indicating that the path of least resistance for XAU/USD continues to be upwards. Market participants are now turning their attention to key economic indicators such as flash PMIs, US Weekly Jobless Claims, and Existing Home Sales data for insights into the global economic health. These data releases are anticipated to provide some impetus to XAU/USD movement in the near term.
Overall, amidst ongoing geopolitical uncertainties and dovish signals from the Fed, gold is likely to maintain its strong bid tone, with investors closely monitoring economic developments and geopolitical events for further cues on market direction.
