Gold prices (XAU/USD) softened to around $2,325 during early Asian trading hours on Monday, influenced by speculation over sustained higher US interest rates. The Federal Reserve’s median projection anticipates one rate cut this year, boosting the US Dollar. However, political uncertainty in Europe may bolster safe-haven flows, limiting gold’s downside.
Cleveland Fed President Loretta Mester highlighted on Friday the prolonged path to the Fed’s 2.0% inflation goal, contingent on improved inflation data. Minneapolis Fed President Neel Kashkari echoed this sentiment on Sunday, suggesting the central bank might wait until December for a rate cut, emphasizing the need for additional data before making decisions. These hawkish stances from Fed officials pressure non-yielding assets like gold, making them pricier for international buyers.
Consumer sentiment hit a seven-month low in June, as the preliminary Michigan Consumer Sentiment Index report on Friday indicated. The index fell 3.5 points to 65.6, below the estimated 72.0 and May’s final reading of 69.1. One-year inflation expectations remained at 3.3%, while the five-year outlook edged up to 3.1% from 3%.
Conversely, Eurozone political issues might restrict gold’s decline. French President Emmanuel Macron’s call for early parliamentary elections following a loss to the right-wing National Rally adds to the region’s uncertainty. Macron criticized the economic programs of extremist parliamentary blocs as unrealistic, warning of significant economic challenges ahead. Any adverse developments in the Eurozone or French political landscape could support gold as a safe-haven asset.
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Gold Price Forecast & Predictions: 2024 and Beyond