During early European trading on Monday, the price of gold (XAU/USD) attracted buyers, rebounding from a recent retracement after touching a two-week high last Friday. Despite the Federal Reserve’s unexpected hawkish stance indicating only one rate cut in 2024, market sentiment continues to price in the potential for two cuts this year, driven by easing inflationary pressures. This has contributed to lower US Treasury bond yields, supporting gold as a safe-haven asset amidst geopolitical tensions and European political uncertainties.
The US Dollar (USD) strengthened following stronger-than-expected US Purchasing Managers’ Index (PMI) figures released last Friday, heightening pressure on gold prices. Traders, awaiting key US macroeconomic releases this week, including the final Q1 GDP print and the Personal Consumption Expenditures (PCE) Price Index, opted for cautious positioning. Additionally, market participants are monitoring comments from influential Federal Open Market Committee (FOMC) members for potential short-term trading opportunities.
From a technical standpoint, gold’s recent decline found support near a two-week ascending trend-line around the $2,312 mark. Further downside risks could emerge if this support is decisively breached, potentially targeting the $2,300 and $2,285 levels. Conversely, resistance lies near the $2,341-2,342 range, with further bullish momentum potentially aiming towards $2,368-2,369 and $2,387-2,388 levels.
The ongoing dynamics in the gold market reflect a delicate balance between economic data, monetary policy expectations, and geopolitical developments, influencing short-term price movements.
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