- Gold price is oscillating in a range near a three-week low touched on Friday.
- Fed rate cut bets undermine the USD, which, along with geopolitical risks, lends support.
- A positive risk tone caps the upside ahead of the global PMIs and the US ISM PMI.
Gold price (XAU/USD) struggles to gain any meaningful traction during the Asian session on Monday amid a combination of diverging forces and languishes near a three-week low touched on Friday. Growing acceptance that the Federal Reserve (Fed) will start cutting rates later this year, bolstered by signs of easing inflationary pressures in the United States (US), continues to undermine the US Dollar (USD). This, along with persistent geopolitical risks, turn out to be key factors lending some support to the safe-haven precious metal.
The upside for the Gold price, however, remains capped in the wake of a generally positive risk tone and hopes for a cease-fire in Gaza. Traders also seem reluctant and prefer to wait for this week's release of important US macro data scheduled at the beginning of a new month, including the Nonfarm Payrolls (NFP) report on Friday. Apart from this, key central bank event risks – the Bank of Canada (BoC) decision on Wednesday and the European Central Bank (ECB) meeting on Thursday – should influence the non-yielding yellow metal.
Daily Digest Market Movers: Gold price struggles to lure buyers despite softer US Dollar
- The US inflation report was in line with estimates and reinforced expectations that the Federal Reserve will cut interest rates this year, which is undermining the US Dollar and acting as a tailwind for the Gold price.
- The US Bureau of Economic Analysis (BEA) reported on Friday that the Personal Consumption Expenditures (PCE) Price Index rose 0.3% in April and held steady at 2.7% on a yearly basis, matching consensus estimates.
- The Core PCE Price Index, which excludes volatile food and energy prices, also matched expectations, and rose 2.8% on a yearly basis, while Personal Income and Personal Spending grew 0.3% and 0.2% respectively.
- The data lifts bets for an imminent Fed rate cut this year and leads to a further decline in the US Treasury bond yields, keeping the USD bulls on the defensive and lending support to the non-yielding yellow metal.
- Adding to this, tensions surrounding the Middle East turn out to be another factor limiting the downside for the safe-haven XAU/USD, though a generally positive tone around the equity markets should cap the upside.
- China's Caixin S&P Global Manufacturing Purchasing Managers' Index (PMI) rose to 51.7 in May from 51.4 previous and pointed to signs of stabilization in the world's second-largest economy, boosting investors' confidence.
- Furthermore, the latest optimism over a new ceasefire plan for Gaza announced by US President Joe Biden is holding back traders from placing aggressive bullish bets around the commodity.
- Market participants now look forward to the release of the final global Manufacturing PMI prints for short-term trading opportunities ahead of the US ISM Manufacturing PMI later during the day.
- Investors this week will also confront important US macro releases, including the NFP report and key central bank event risks – the BoC policy decision on Wednesday, followed by the ECB meeting on Thursday.
Technical Analysis: Gold price could weaken further once $2,320 support is broken decisively
From a technical perspective, some follow-through selling below the $2,320 level will confirm a breakdown through the 50-day Simple Moving Average (SMA) and pave the way for deeper losses. Given that oscillators on the daily chart have just started gaining negative traction, the Gold price might then weaken further below the $2,300 round-figure mark and test the next relevant support near the $2,285-$2,284 horizontal zone.
On the flip side, momentum beyond the $2,343-$2,344 area is likely to confront stiff resistance near the $2,360 region (Friday's swing high). Some follow-through buying beyond the $2,364 level will be seen as a fresh trigger for bullish traders and lift the Gold price towards the $2,385 intermediate hurdle en route to the $2,400 mark. The momentum could extend to the $2,425 zone en route to the $2,450 region or the all-time peak touched in May.
US Dollar price in the last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.07% | 0.00% | -0.19% | -0.27% | 0.24% | -0.29% | -1.35% | |
| EUR | 0.07% | 0.07% | -0.12% | -0.20% | 0.31% | -0.22% | -1.28% | |
| GBP | 0.00% | -0.07% | -0.19% | -0.27% | 0.24% | -0.29% | -1.35% | |
| CAD | 0.20% | 0.12% | 0.19% | -0.08% | 0.43% | -0.10% | -1.17% | |
| AUD | 0.27% | 0.20% | 0.27% | 0.08% | 0.51% | -0.02% | -1.08% | |
| JPY | -0.24% | -0.32% | -0.23% | -0.45% | -0.53% | -0.53% | -1.61% | |
| NZD | 0.29% | 0.23% | 0.30% | 0.09% | 0.03% | 0.54% | -1.06% | |
| CHF | 1.33% | 1.26% | 1.33% | 1.14% | 1.07% | 1.57% | 1.04% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to recovery gains near 1.0950 on US Dollar weakness
EUR/USD is holding onto recovery gains near 1.0850 in European trading on Tuesday amid a broadly weaker US Dollar. The recovery in risk sentiment undermines the havem demand for the US Dollar, lifting the pair. Dovish Fed expectations also weigh negatively on the Greenback. Tariff updates eyed.
GBP/USD pares back gains toward 1.2750
GBP/USD is paring back gains to revisit 1.2750 in Tuesday's European session. The pair draws support from renewed US Dollar weakness and a positive shift in risk sentiment but US President Trump's tariff war and global growth concerns limit its upside.
Gold bounces back above $3,000 as trade war tensions flair up
Gold price is bouncing higher in tandem with Equities after another stellar nosedive move on Monday. The precious metal trades just above the $3,000 mark at the time of writing on Tuesday. The bounce is supported by a technical element on the one hand and a geopolitical driver on the other.
XRP battles tariff turbulence amid MVRV buy signal
Ripple seeks stability in a volatile crypto landscape influenced by macroeconomic factors, including reciprocal tariffs. The international money transfer token hit a low of $1.64 on Monday after opening the week at $1.92, representing a 14.5% daily drop.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.