Gold prices have fallen from a nearly three-month high reached on Wednesday, despite a small USD increase.
The gold price (XAUUSD) remained low throughout the first half of the European session on Thursday, but appears to have snapped a three-day gaining streak, reaching its highest level since early November the previous day.
USD bulls are hesitant to place aggressive wagers due to expectations of future Fed rate decreases.
The US Dollar (USD) rises for the second day in a row, recovering further from its monthly low. This, along with a consistent performance around the Equity markets seem to be critical variables undermining the safe-haven precious metal.
However, forecasts that the Federal Reserve (Fed) will cut interest rates twice this year keep a lid on US Treasury bond yields, which should cap the USD and provide some support for the non-yielding gold price.
Concerns over Trump’s tariff intentions help to minimize further losses for the XAUUSD.
The uncertainty about US President Donald Trump’s trade plans, which could lead to trade wars and increased market volatility, should help limit losses in the XAU/USD. This calls for caution before concluding that the one-month-old rally has run its course.
Daily Market Update: Gold price has a negative bias with minor USD rise; downside remains cushioned.
The US Dollar held steadily above its lowest level since late December, hit on Wednesday after a minor recovery in the US Treasury bond yields rise, sparking some selling around the gold market on Thursday.
The absence of details about US President Donald Trump’s tariff plans, as well as lessening global tensions, continue to bolster the risk-on mindset, which is considered as another factor hurting gold as a safe haven.
Trump’s proposed plans widely considered as inflationary, which may push the Federal Reserve to maintain its hawkish position and keep interest rates higher for longer to contain rising price pressures.
Investors, on the other hand, continue to expect the US central bank to cut borrowing prices at least twice before the end of the year. This might limit the gains for US bond yields and the greenback.
Trump’s speech to the World The Economic Forum will be look to for more specific tariff announcements. Aside from that, the announcement of the US Weekly Jobless Claims should provide some traction for the XAUUSD.
The Bank of Japan anticipated to announce its decision at the end of a two-day policy meeting on Friday, raising interest rates from 0.25% to 0.50%, the highest since the 2008 global financial crisis.
The Fed and European Central Bank slated to make rate decisions next week on Wednesday and Thursday, respectively, which might infuse volatility and lend some momentum to the non-yielding yellow metal.
