Gold prices (XAU/USD) showed a slight upward trend in early European trading hours on Thursday but struggled to extend gains beyond a nearly two-week peak reached the previous day. The prevailing bullish sentiment in global equity markets acted as a deterrent for the safe-haven metal amid reduced trading volumes due to the US Independence Day holiday. Traders remained cautious, opting to await Friday’s release of the highly anticipated US Nonfarm Payrolls (NFP) report before committing to new positions.
Support for gold prices persisted, however, buoyed by growing expectations that the Federal Reserve (Fed) will initiate interest rate cuts later this year. This sentiment was reinforced by recent soft US economic data, including indicators of labor market weakness and overall economic softening released on Wednesday. Additionally, minutes from the latest Federal Open Market Committee (FOMC) meeting indicated a consensus among policymakers that US economic growth is gradually moderating. Consequently, US Treasury bond yields declined overnight, pushing the US Dollar (USD) to a three-week low, factors which are likely to continue supporting the price of gold despite prevailing market headwinds.
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