Gold price (XAU/USD) attracts some sellers during the Asian session on Wednesday and erodes a part of the previous day's strong move back up closer to the record high. The downtick could be attributed to some profit-taking amid a generally positive risk tone, which tends to undermine demand for the safe-haven bullion. That said, the uncertainty surrounding US President Donald Trump's tariff plans might continue to act as a tailwind for the precious metal.
Meanwhile, expectations that the Federal Reserve (Fed) might cut interest rates further this year, bolstered by a surprise drop in US Retail Sales, fail to assist the US Dollar (USD) to capitalize on Tuesday's modest gains. This should contribute to limiting any meaningful slide for the Gold price. Traders might opt to wait for the FOMC meeting minutes for cues about the rate-cut path before placing directional bets around the non-yielding yellow metal.
Gold price bulls turn cautious amid a positive risk tone, ahead of FOMC meeting minutes
The optimism over a delay in the implementation of US President Donald Trump's reciprocal tariffs and talks aimed at ending the protracted Russia-Ukraine war prompted some profit-taking around the Gold price on Wednesday.
Investors remain worried about a potential escalation in global trade tensions on the back of Trump's protectionist policies. This, along with bets for further policy easing by the Federal Reserve, supports the safe-haven bullion.
The disappointing release of US Retail Sales figures on Friday, along with mixed signals on inflation, suggests that the US central bank could possibly cut interest rates at the September or October monetary policy meeting.
In fact, the Fed Funds Futures see the possibility of a 40 basis point rate cut by the end of this year. This keeps a lid on the US Dollar (USD) recovery from a two-month low and should further underpin the XAU/USD.
San Francisco Fed President Mary Daly said on Tuesday that the US central bank should keep short-term borrowing costs where they are until the progress toward achieving the 2% inflation target is more visible.
Hence, the market focus will remain on the release of the Fed's January meeting minutes, which will be looked upon for clues about the central bank's interest rate trajectory and influence on the non-yielding yellow metal.
Source: Fxstreet
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