Gold price holds above $2,300 as the US Dollar drops ahead of preliminary US Q1 GDP data.
The Fed may maintain the “higher for longer” interest rates argument even if GDP growth remains slower than expected.
The easing of tensions in the Middle East has improved the demand for risky assets.
Gold price (XAU/USD) remains well-supported above the crucial support of $2,300 in Thursday’s European session. The precious metal finds some bids as the US Dollar falls further amid concerns over higher interest rates by the Federal Reserve (Fed), which have impacted economic activity as shown by the S&P Global preliminary PMI report for April.
The near-term outlook for Gold remains weak as Fed policymakers see no urgency for rate cuts due to higher inflationary pressures and tight labor market conditions. Also, safe-haven demand has weakened due to waning fears of widening Middle East conflict.
Meanwhile, upcoming US macro data such as Q1 Gross Domestic Product (GDP) and the core Personal Consumption Expenditure Price Index (PCE) data for March will guide the next move in the Gold price. A significant change in the above-mentioned economic indicators will likely force traders to reassess expectations for the timing of Fed rate cuts. Currently, financial markets anticipate the first cut in September.
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