The price of gold (XAU/USD) has struggled to build on its modest overnight gains, remaining within a narrow trading range during the early European session on Tuesday. Traders are exercising caution and opting to stay on the sidelines ahead of the release of the US Personal Consumption and Expenditure (PCE) Price Index scheduled for Friday. This crucial data release is anticipated to shape expectations regarding the Federal Reserve’s (Fed) rate cut trajectory and could provide fresh momentum for the non-yielding yellow metal.
The recent guidance from the US central bank indicates its intention to proceed with interest rate cuts totaling 75 basis points in 2024. This has kept US Treasury bond yields subdued, consequently weighing on the US Dollar (USD) and offering some support to the price of gold. Furthermore, geopolitical tensions arising from ongoing conflicts, such as the Russia-Ukraine war and turmoil in the Middle East, suggest that the prevailing direction for the safe-haven asset remains skewed to the upside.
Market participants are now turning their attention to the US economic calendar, which includes the release of Durable Goods Orders, the Conference Board’s Consumer Confidence Index, and the Richmond Manufacturing Index later during the early North American session. These data releases, coupled with movements in US bond yields, are expected to influence USD demand and could provide additional momentum for the price of gold. Additionally, fluctuations in broader market sentiment will likely contribute to short-term trading opportunities surrounding XAU/USD.
