Gold price (XAU/USD) remains steady below the $3,000 psychological mark on Monday, supported by ongoing geopolitical tensions and expectations of interest rate cuts by the Federal Reserve. Market participants continue to seek the safe-haven asset amid uncertainty surrounding trade policies and global economic risks.
Key Highlights:
- Gold price remains firm below the $3,000 psychological barrier, supported by safe-haven demand.
- Market sentiment is influenced by geopolitical risks and Federal Reserve interest rate expectations.
- The US Dollar stays under pressure, further bolstering gold prices.
- Investors await the outcome of the Federal Open Market Committee (FOMC) meeting for further cues.
Geopolitical and Economic Influences on Gold Price
Gold price gains are driven by multiple factors, including concerns over global economic stability and geopolitical conflicts. Recent developments in the Middle East and ongoing trade disputes have fueled safe-haven demand, while the US Dollar’s depreciation adds further support to the yellow metal.
Geopolitical Tensions Boost Gold’s Safe-Haven Appeal
- Houthi militants have vowed to target US ships in response to military actions in Yemen, raising fears of a prolonged conflict.
- An Israeli drone strike in Gaza resulted in casualties, increasing regional instability.
- US Treasury Secretary Scott Bessent acknowledged the possibility of economic slowdowns but remains optimistic about market resilience.
These events contribute to heightened risk sentiment, prompting investors to shift towards gold as a safe asset.
Federal Reserve Rate Cuts in Focus
Market expectations of Federal Reserve rate cuts remain a key driver for gold price movements. Recent economic data, including declining US inflation and slowing labor market conditions, support the case for multiple rate cuts throughout the year. Fed funds futures indicate a possible 25 basis-point rate cut in June, July, and October.
Additionally, the University of Michigan Consumer Sentiment Index recently fell to a multi-year low, reinforcing expectations for monetary easing.
Technical Analysis: Key Levels to Watch
From a technical standpoint, the gold price faces key resistance and support levels:
- Resistance: $3,000 (psychological level), followed by $3,028.
- Support: $2,956, with further downside potential towards $2,930.
- RSI Indicator: Gold’s Relative Strength Index (RSI) hovers near overbought territory, suggesting potential for consolidation before another breakout.
The overall trend remains bullish, with gold price likely to maintain its uptrend unless a significant shift in macroeconomic conditions occurs.
Market Outlook: What’s Next for Gold?
Traders will focus on upcoming economic releases, including US Retail Sales and the Empire State Manufacturing Index, for short-term market direction. However, the primary event this week will be the FOMC policy meeting, which is expected to provide clearer guidance on future interest rate decisions.
Given ongoing geopolitical risks and monetary policy shifts, gold price is expected to remain supported in the near term. Investors should monitor risk sentiment and economic indicators closely to gauge potential movements in the gold market.
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