Gold price (XAU/USD) is currently trading lower at around $2,325 during the early Asian trading hours on Monday. This downward movement can be attributed to the speculation that US interest rates will remain higher for a longer period, as Federal Reserve (Fed) officials are projecting only one interest rate cut this year. The strength of the US Dollar is also putting pressure on the price of Gold. However, there are concerns about political uncertainty in Europe, which could boost safe-haven flows and limit the downside potential for Gold.
Cleveland Fed President Loretta Mester expressed her desire to see better inflation data and mentioned that achieving the Fed’s 2.0% inflation target may take longer than expected. On the other hand, Minneapolis Fed President Neel Kashkari stated that it is likely the central bank will wait until December to cut interest rates. These hawkish comments from Fed officials are impacting Gold prices negatively, as it makes the precious metal more expensive for foreign buyers. Additionally, consumer sentiment in the US fell to a seven-month low in June, further adding pressure on Gold prices.
Despite the downward pressure on Gold prices, there could be some support from Eurozone political concerns. Following France’s President Emmanuel Macron’s call for early parliamentary elections after a defeat in the European vote, there are concerns about economic programs proposed by extremist groups. Macron stated that France is facing major economic issues and any negative developments in the Eurozone or France’s political situation could provide support to safe-haven assets like Gold. This uncertainty in Europe could potentially cap the downside for Gold prices in the near term.
The current market conditions suggest that there is a tug-of-war between the hawkish Fed comments and Eurozone political concerns, influencing the movement of Gold prices. While the Fed officials’ comments are putting pressure on Gold due to expectations of delayed interest rate cuts, the political uncertainty in Europe is creating safe-haven demand for the precious metal. In such a scenario, it is important for traders and investors to closely monitor developments in both the US and Eurozone to gauge the direction of Gold prices in the coming days.
In conclusion, the Gold price is currently trading lower at around $2,325 in Monday’s early Asian session, influenced by the Fed’s hawkish comments and the strength of the US Dollar. However, Eurozone political concerns could provide support to Gold prices and limit the downside potential. Traders should keep a close watch on updates from the Fed and developments in Europe to anticipate the future movement of Gold prices. It is important to stay informed and analyze both domestic and international factors that could impact the price of Gold in the short term.
