Gold prices have fallen below $2,900 as the US Dollar (USD) rebounds from a multi-month low. The drop occurred during the first half of the European session on Monday. Gold retreated from recent gains as the USD recovered from its weakest levels since November.
The USD’s bounce is the primary factor weighing on gold. As the dollar strengthens, gold becomes more expensive for foreign investors. However, concerns over trade tensions, particularly President Donald Trump’s policies, continue to support gold’s appeal. These fears, along with expectations of multiple interest rate cuts by the Federal Reserve, help keep gold in demand.
Recent data also plays a role. Last Friday, a weaker-than-expected US jobs report caused initial concerns. However, the market seems to have moved past that. The USD rebound comes alongside steep declines in US Treasury bond yields. This has dampened investor enthusiasm for the USD, suggesting a mixed outlook in the short term.
Still, fears about a potential global trade war and US tariffs may provide further support to gold. These concerns are expected to increase demand for safe-haven assets, potentially limiting further declines in gold. Additionally, the uncertainty surrounding the Federal Reserve’s next steps on interest rates is crucial. While bets on rate cuts may support gold, the timing and scale of those cuts will impact price movements.
In conclusion, the gold price continues to face downward pressure as the USD rebounds. However, concerns about trade and rate cuts could provide support. As investors weigh these factors, the gold price remains vulnerable to fluctuations. Market uncertainties are likely to keep gold in focus for the foreseeable future.
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