Gold prices (XAU/USD) experienced an uptick on Monday, supported by a weaker US Dollar (USD) and escalating geopolitical tensions in the Middle East. In the long term, the precious metal may find further support from increasing demand by central banks. However, reduced expectations for a Federal Reserve (Fed) rate cut this year, coupled with hawkish comments from Fed officials, could apply downward pressure on gold prices. Higher interest rates tend to make gold a less attractive investment as a store of value.
Monday’s market activity is expected to be lighter due to the Memorial Day bank holiday in the United States, with US banks closed. Gold traders will closely watch the Fed’s upcoming speeches on Tuesday, featuring remarks from Michelle Bowman, Loretta Mester, and Neel Kashkari. Additionally, Thursday’s release of the first-quarter US Gross Domestic Product (GDP) data will be a key focus. The GDP is projected to grow by 1.5% in Q1. Should the data exceed expectations, it could strengthen the US Dollar, putting additional pressure on USD-denominated gold prices.
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