The price of gold, denoted as
XAU/USD, has attracted buyers for the second consecutive day on Friday,
hovering just below the recent high point before the European trading session
begins. This renewed interest in gold follows the release of the US GDP report
on Thursday, which highlighted a notable slowdown in economic growth at the
beginning of 2024, coupled with an undesirable increase in inflation. This
economic data has encouraged some investors to turn to gold as a safe-haven
asset. However, the upward movement lacks strong bullish momentum due to a
resurgence in US Dollar buying, supported by expectations of a more aggressive
stance from the Federal Reserve.
Investors appear convinced that
the Fed will postpone interest rate cuts due to persistent inflationary
pressures, which maintain elevated yields on US Treasury bonds and bolster
demand for the US Dollar. Additionally, a generally positive sentiment in equity
markets acts as a limiting factor on gains for gold, which is typically sought
after in times of market uncertainty.
Traders are now awaiting the
release of the US Personal Consumption Expenditures (PCE) Price Index, which
will provide insight into the Fed's future monetary policy decisions. This data
will likely influence the next directional movement for gold, a commodity that
does not offer yield but is often considered a hedge against economic
uncertainty.
