The Gold price (XAU/USD) edges lower to around $3,630 during the early Asian session on Friday. The precious metal retreats from a record high on some profit-taking. Nonetheless, the rising bets of the US Federal Reserve (Fed) rate cut in the upcoming meeting might cap its downside. Traders await the University of Michigan Consumer Sentiment Index data, which is due later on Friday.
A modest rebound in the US Dollar (USD) and a wave of profit-taking weigh on the USD-denominated commodity price as traders continue to assess the US inflation reports, which will help shape the next steps in the Fed's monetary policy.
Nonetheless, US data showed a surprise decline in the Producer Price Index (PPI) inflation and weakness in the labor market. These reports reinforced the case that the Fed will cut the interest rate in the September policy meeting.
Barclays analysts predict three straight rate cuts by the US central bank by the end of the year. They forecast a 25 basis points (bps) reduction in September, October, and December. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.
Furthermore, persistent geopolitical risks in Europe and the Middle East could boost the Gold price, a traditional safe-haven asset. Geopolitical tensions in Europe rose after Poland shot down Russian drones that crossed into its territory in Russia's latest attacks on Ukraine. Additionally, Israel on Tuesday launched a strike on Doha, Qatar, targeting the senior leadership of Hamas.
Source: FXstreet
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