Gold prices continue to face some pressure as the US Dollar (USD) strengthens slightly, prompting traders to take profits. Despite this, the precious metal remains supported by broader market conditions and geopolitical uncertainties.
As of Friday’s early European session, gold (XAU/USD) bounced back from a three-day low, but it still retains a negative bias for the second consecutive day, trading just above the $3,030 level. The recent firmness in the USD comes after the Federal Reserve’s forecast indicating only two rate cuts of 25 basis points (bps) by the end of the year, which has encouraged some profit-taking among gold traders.
However, there’s a prevailing sentiment that the Fed may resume its rate-cutting cycle sooner than initially expected due to concerns over a potential slowdown driven by tariffs. This view could eventually weigh on the USD, providing support for the non-yielding gold.
Additionally, growing trade uncertainties and rising geopolitical tensions, especially around U.S. President Donald Trump’s trade policies, are expected to prevent significant losses in gold. These factors, combined with the possibility of a limited U.S. economic recovery, should provide ongoing support for gold, keeping it on track to secure gains for the third consecutive week.
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