The US dollar (USD) continues to attract demand as short-covering and easing of the US-China trade war keep putting bearish pressure on the USD-denominated gold price, while US Treasury bond yields and risk sentiment turn south again.
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The market remains nervous about the economic prospects in the world’s two largest economies, the United States (US) and China, with advance US first quarter (Q1) gross domestic product (GDP) and non-farm payrolls (NFP) data due on Wednesday and Friday, respectively.
Amid easing US-China trade tensions, the focus turns back to US fundamentals and the Federal Reserve’s (Fed) interest rate outlook, which will drive gold price action in the days ahead.
The negative impact of US tariffs will likely be reflected in the US GDP report, and if it shows negative growth, the chances of a Fed rate cut in June will increase. Expecting this statement, gold price could see a rally as geopolitical factors continue to remain supportive.
US President Donald Trump on Sunday urged Russia to stop its attacks on Ukraine. At the same time, according to Reuters, US Secretary of State Marco Rubio warned that the US could withdraw from peace talks if no meaningful progress is made.
Meanwhile, Reuters cites a report from the China Gold Association, which says gold consumption in the country fell by about 6% in Q1, while gold exchange-traded fund (ETF) holdings in China increased by 327.73% on an annual basis during the same period.
Looking ahead, gold price and USD will continue to be at the mercy of US trade headlines in the countdown to important US data releases starting on Tuesday.
