Gold prices rose during early European trading on Wednesday, ahead of the release of key US inflation figures later today. The precious metal has traded within a narrow range this week, reflecting the tug-of-war between opposing market forces. On the one hand, geopolitical tensions and concerns over the long-term outlook for the global economy have bolstered gold's haven appeal. On the other, improved risk sentiment—driven by renewed optimism that US-China trade talks may avert a full-blown trade war—has supported risk assets, such as equities, to the detriment of gold. Adding further pressure to bullion, stronger-than-expected US employment data released last Friday underscored the resilience of the American economy and dampened expectations of a Federal Reserve rate cut this summer. This, in turn, supported the US dollar, which often moves inversely to gold prices. Against this backdrop, market participants will closely watch today's May US inflation report. Analysts remain uncertain about the timing and extent of the tariffs' impact on consumer prices. Any upside surprises could further reduce the likelihood of Fed rate cuts, potentially strengthening the dollar and exerting downward pressure on gold.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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