- The uncertainty over the likely timing of when the Federal Reserve will start cutting interest rates keeps traders on the sidelines and leads to subdued range-bound price action around the Gold price.
- The Fed projected only one interest rate cut this year as compared to three projected in March, which acts as a tailwind for the US Treasury bond yields and caps the upside for the non-yielding yellow metal.
- The US Retail Sales data released on Tuesday pointed to lackluster economic activity, which, along with weaker US consumer and producer prices, should allow the Fed to ease monetary policy soon.
- The current market pricing indicates a greater chance of the first rate cut in September and the possibility of one more rate cut in November or December, offering some support to the XAU/USD.
- Ukrainian drone strikes on Russian energy infrastructure and Israeli's warning that an all-out war with Iran-backed Hezbollah was coming soon point to escalating geopolitical risk in Europe and the Middle East.
- Adding to this, concerns that a new government in France could weaken fiscal discipline act as a tailwind for the safe-haven assets and should help limit any meaningful downfall for the commodity.
- Investors now look forward to the Swiss National Bank (SNB) decision and the crucial Bank of England (BoE) policy meeting, which might infuse volatility and provide some impetus to the metal.
- Traders will further take cues from the US economic docket, featuring the release of the usual Weekly Initial Jobless Claims, Philly Fed Manufacturing Index, Building Permits and Housing Starts
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