Gold prices seesawed in early Tuesday trading and, following a rebound, are now hovering around the $3,300 level. Traders remain torn between optimism over the outcome of the US-China trade talks and ongoing concerns about the global economic outlook, geopolitical tensions, and the prospect of interest rate cuts by the Federal Reserve. A positive outcome from the negotiations between the world’s two largest economies could help avert a full-scale trade war. This is bolstering risk appetite in financial markets, which tends to weigh on gold prices. However, persistent geopolitical risks continue to support demand for the precious metal as a haven asset, while expectations of Fed rate cuts are putting downward pressure on the US dollar—another factor that supports gold, given their typically inverse price relationship. Against this backdrop, tomorrow’s release of US inflation data for May could significantly influence market expectations regarding the Fed’s monetary policy path, potentially affecting both the dollar and, in turn, gold prices.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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