Gold prices, represented by XAU/USD, experienced a pullback after reaching a new record high earlier in the week, remaining defensive during the first half of the European session. The surge in US macroeconomic data, indicating a resilient economy, has cast doubts on the Federal Reserve’s intention to implement three interest rate cuts this year. Consequently, this change in outlook has kept US Treasury bond yields elevated, leading to profit-taking in the non-yielding precious metal, particularly following its recent strong performance over the past week.
Despite the downward pressure on gold prices, a significant corrective decline seems unlikely due to ongoing geopolitical risks. The prolonged Russia-Ukraine conflict and the potential escalation of the Israel-Hamas dispute to the broader Middle East region continue to fuel uncertainty. Additionally, the recent earthquake in Taiwan has added to the global risk landscape. These factors, coupled with uncertainties surrounding the Fed‘s rate-cutting plans and a modest decline in the US Dollar (USD), are expected to support gold as a safe-haven asset.
Traders are now closely monitoring US macroeconomic data releases and speeches by Fed officials for potential market-moving cues, as they seek fresh momentum amidst the evolving economic and geopolitical landscape.
