Gold Struggled to acquire Traction, although the Downside appears to be Cushioned.
The gold price (XAUUSD) struggles to capitalise on Overnight moderate gains. Oscillating in a narrow trading band throughout the early European session on Tuesday. Traders choose to remain on the sidelines ahead of the release of the US Personal Consumption and Expenditure (PCE) Price Index on Friday.
The Fed’s predicted three rate cuts in 2024 continue to undercut the USD while lending support.
The essential statistics may influence expectations regarding the Federal Reserve’s (Fed) rate cut course. And give the non-yielding yellow metal a new sense of direction.
Meanwhile, the US Federal Reserve said last week that it expects to decrease interest rates by 75 basis points in 2024. This keeps US Treasury bond yields low. Weighing on the US Dollar (USD) and providing some support to the gold price. Aside from that, geopolitical threats from the extended Russia Ukraine war. And Middle Eastern conflicts suggest that the safe-haven precious metal is still on the rise.
The US macro data released on Tuesday should provide some encouragement ahead of the US PCE Price Index on Friday.
Traders are now looking 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 in the early North American session. This, combined with US bond yields, will fuel USD demand and provide some support to the gold price. Aside from that, broader risk sentiment should help to generate short-term trading opportunities in the XAUUSD.
Daily Market Movers: Gold price gains support from minor US dollar depreciation and geopolitical uncertainties.
Traders are pricing in a 70% chance that the Federal Reserve will begin cutting interest rates in June, keeping US Dollar bulls on the defensive and acting as a tailwind for the non-yielding gold price.
However, several Fed members indicated concern over persistently high inflation and stronger-than-expected US macro data, limiting USD losses and restraining the precious metal’s rise.
Atlanta Federal Reserve President Raphael Bostic said on Monday that he expects the US The economy and inflation are expected to decelerate gradually, with the US central bank lowering the policy rate only once this year.
Chicago Fed President Austan Goolsbee stated that three cuts in 2024 were consistent with his views, but the US central bank must see improvement in inflation and achieve a balance with its dual mandate.
Separately, Fed Governor Lisa Cook stated that inflation has declined significantly, but the route to disinflation has been lumpy and uneven, as predicted, while the job market has remained solid.
Traders are looking to Tuesday’s US data calendar. Which includes Durable Goods Orders, the Conference Board’s Consumer Confidence Index. And the Richmond Manufacturing Index, for some stimulus.
However, the market attention will remain on the US Personal Consumption Expenditures (PCE). The Price Index, the Fed’s favored inflation gauge, is set to be released on Friday.
Meanwhile, geopolitical threats from Russia’s extended war with Ukraine. As well as doubts over whether the UN resolution would result in an actual truce in the Gaza Strip, could support the XAUUSD.
