Gold price moves away from two-week high amid modest USD recovery, positive risk ton
Gold price (XAU/USD) attracted some sellers for the second straight day on Tuesday as the optimism led by US President Donald Trump's decision to delay imposing tariffs on the European Union (EU) underpins demand for safe-haven assets.
Apart from this, a modest US Dollar (USD) rebound from the vicinity of the monthly low turns out to be another factor exerting downward pressure on the commodity.
However, the uncertainty around Trump's trade policies keeps a lid on the optimism. Furthermore, growing market concerns that Trump's sweeping tax cuts and spending bill would worsen the US budget deficit, along with expectations that the Federal Reserve (Fed) will lower borrowing costs further in 2025, might cap the USD.
This, in turn, warrants caution before placing aggressive bearish bets around the Gold price
The development offered some relief to markets, though investors remain on edge amid the uncertainty surrounding Trump's trade policies and deep-rooted tensions between the US and China the world's two largest economies. Apart from this, US fiscal concerns and geopolitical risks could lend support to the Gold price.
Trump’s dubbed “Big, Beautiful Bill”, which would add an estimated $4 trillion to the federal primary deficit over the next decade, was passed in the lower house last week and will be voted on in the Senate this week. This fuels worries that the US budget deficit could worsen at a faster pace than previously expected.
Meanwhile, signs of easing inflationary pressure in the US lifted market bets that the Federal Reserve will eventually step in to support economic growth. In fact, traders are pricing in the possibility of at least two 25 basis point Fed rate cuts by the year-end, which keeps the US Dollar depressed near the monthly low.
Source: Fxstreet
