Gold prices edged down slightly in early European trading, continuing the trend observed over the past few weeks, during which prices have struggled to deviate from the current levels. Support for the precious metal persists, fueled by geopolitical uncertainty worldwide, which bolsters gold's haven appeal. However, traders are increasingly sceptical about the Federal Reserve's ability to proceed with its anticipated rate-cutting cycle. Yesterday's US services PMI data revealed the highest reading in 38 months, underscoring the resilience of the American economy. This resilience, coupled with expectations of inflationary pressures from protectionist policies under the incoming administration, suggests the central bank may be compelled to maintain higher interest rates for an extended period. This dynamic is driving up treasury yields and strengthening the US dollar, factors that limit the upside potential for non-yielding gold.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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