Gold prices (XAU/USD) have seen a rise near the $2,320 mark, marking the third consecutive day of positive movement on Monday. Despite this upward trend during the day, the market lacks strong bullish conviction.
Investor sentiment appears to be influenced by growing beliefs that the Federal Reserve (Fed) will postpone interest rate cuts due to persistent inflation concerns. This sentiment was reinforced by the release of the US Personal Consumption Expenditures (PCE) Price Index last Friday. Additionally, a generally optimistic tone in equity markets is seen as a contributing factor dampening the appeal of the safe-haven precious metal.
Concurrently, the US Dollar (USD) is experiencing renewed selling pressure following a significant rally in the Japanese Yen (JPY), pushing it towards a two-week low recorded last Friday. Furthermore, ongoing geopolitical tensions arising from prolonged conflicts such as the Russia-Ukraine war and Israel-Hamas conflict are providing support for gold prices as a safe-haven asset.
Despite these factors, the mixed nature of the fundamental backdrop suggests caution in making new directional trades involving XAU/USD, especially ahead of critical events such as the upcoming FOMC meeting and key US macroeconomic data releases, notably the Nonfarm Payrolls (NFP) report. Investors are advised to monitor developments closely given the potential impact on market dynamics and gold price movements.
