Gold price faced some selling pressure on Monday as traders reacted to expectations of a hawkish stance from the Federal Reserve and a positive risk tone in the market. The modest decline in the price of gold was also supported by a slight weakening of the US Dollar, which helped limit the downside for the precious metal.
Geopolitical tensions, including the ongoing conflict between Israel and Hamas, as well as the Russia-Ukraine war, continued to keep investors on edge and provided some support for gold as a safe-haven asset. However, the overall positive sentiment in equity markets contributed to the downward pressure on gold.
Traders were also cautious ahead of the upcoming Federal Open Market Committee (FOMC) meeting and key US macroeconomic data releases scheduled for the week. The recent release of the US Personal Consumption Expenditures (PCE) Price Index, which showed higher-than-expected inflation, reinforced expectations of the Fed maintaining higher interest rates for longer, leading to a shift away from non-yielding assets like gold.
Despite the downward pressure on gold, the price remained relatively stable, with limited downside potential. Investors were also awaiting the outcome of the FOMC meeting and important US economic data releases, including the Nonfarm Payrolls (NFP) report on Friday, to gauge the future direction of the market.
From a technical perspective, the key levels to watch for gold include breaking through the $2,352-2,353 confluence for bulls to seize near-term control. On the downside, a break below the $2,320 area could lead to a retest of lower support levels around $2,292-2,291.
Overall, the combination of factors influencing the gold price, including geopolitical tensions, inflation expectations, and market sentiment, will continue to shape the direction of the precious metal in the coming days. Investors will be closely monitoring developments in the market and key economic data releases for further insights into the future movement of gold prices.
