Gold price (XAU/USD) have dipped slightly after touching a two-month high during early European trading on Tuesday. The yellow metal remains steady near $2,725, holding onto a 0.50% intraday gain. The US Dollar (USD) has recovered from its recent two-week low, supported by expectations of inflationary pressure due to US protectionist policies. This recovery has weighed on the appeal of the safe-haven commodity.
The current market mood, bolstered by a positive tone in equities, is also limiting further upward movement in gold prices. However, concerns about potential trade wars, driven by tariff announcements from US President Donald Trump, continue to influence investor sentiment.
Gold price Positive Momentum Despite Challenges
While USD recovery impacts gold price, the broader backdrop remains bullish. Market speculation about Federal Reserve interest rate cuts later this year has reduced US Treasury bond yields, supporting gold price attractiveness. The lack of significant US economic data is likely to sustain the metal’s upward bias in the near term.
Additionally, Trump’s tariff threats, including a potential 25% levy on Canadian and Mexican imports, underline geopolitical risks. Such uncertainties could revive demand for safe-haven assets like gold, despite temporary pullbacks.
USD Demand Gains Momentum, Impacting Gold Price and XAU/USD Forecast
The USD has regained traction following a decline to a two-week low. The expectation that Trump’s policies may fuel inflation and prompt a hawkish Federal Reserve stance has boosted the dollar. This recovery has capped immediate gains in gold prices, though the metal continues to find buyers at lower levels.
Key Market Events to Watch
Upcoming events, including the Bank of Japan policy meeting and global PMI releases, are likely to influence gold’s price trajectory. These developments will provide insights into economic conditions, potentially adding volatility to XAU/USD in the latter half of the week.
Technical Outlook: Gold’s Path Ahead
Gold prices appear to have established support above the $2,720 level. Technical indicators suggest that the bullish momentum is intact, with the next resistance zone near $2,735. A breakout above this level could pave the way toward $2,746-$2,748, with further gains potentially testing the all-time high near $2,790.
Conversely, a drop below $2,700 could trigger further corrections. Key support levels to monitor include $2,662 and $2,635.
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