Gold fails to build on the previous day’s gains and encounters some supply.
The gold price (XAUUSD) attracts some sellers during the Asian session on Thursday. Eroding some of the previous day’s goodish rebound move from the weekly low.
A minor USD increase and a risk-on mentality prove to be major factors impacting on the XAUUSD.
The US Dollar (USD) regained some positive traction on hopes. That the Federal Reserve (Fed) may postpone interest rate decreases. Bolstered by a strong US inflation report. This, combined with the current bullish run The global equities markets. Put some downward pressure on the safe haven precious metal.
However, widespread consensus that the Fed will begin decreasing interest rates. At the June policy meeting should limit the Greenback’s upside and support the non yielding Gold price. Aside from that, global concerns should help to limit the downside for the XAUUSD.
The Fed’s rate-cutting path remains unknown, and international tensions should help limit the downside.
Traders may also avoid placing strong wagers in advance of the critical two day. FOMC meeting, which begins next Tuesday.
Daily Market Movers: Gold price is undercut by minor USD increase; downside appears cushioned.
Hopes of an interest rate drop by the Federal Reserve at the June policy meeting could keep the US dollar In the face of global threats. Bulls remain on the defensive and continue to function as a tailwind for the non yielding gold price.
Moreover The US CPI report released on Tuesday showed some stickiness in inflation. Which could push the Fed to cling to its higher for longer narrative and prevent XAUUSD bulls from putting new bets.
Furthermore Investors are concerned about geopolitical dangers arising from the ongoing Russia-Ukraine crisis and the Israel-Hamas conflict, which appear to enhance the precious metal’s safe-haven position.
Russian President Vladimir Putin stated that sending soldiers to Ukraine would be a substantial escalation of the conflict.
On Wednesday, Russian President Vladimir Putin stated. That sending soldiers to Ukraine would be a substantial escalation of the conflict. And that Moscow was prepared for nuclear war.
An Israeli attack targeted a UN humanitarian distribution center in Rafah. While Lebanon’s Hezbollah says two of its members were killed in the Bekaa Valley as Israel conducted a second day of airstrikes.
According to Politico, senior US officials have informed their Israeli counterparts. That the Biden administration will back the attack of high value Hamas targets in and underneath Rafah.
The uncertainty around the Fed’s rate-cutting strategy keeps US Treasury bond yields elevated. Which helps restrict any major USD fall and should prevent any meaningful appreciation in the precious metal.
Traders are now looking for some momentum from Thursday’s US macro data. Which includes monthly Retail Sales, the Producer Price Index. And weekly Jobless Claims, while the focus is still on next week’s FOMC policy meeting.
