Gold price (XAU/USD) trades with a negative bias for the second consecutive day, though it lacks bearish conviction and holds above the $3,300 mark during the Asian session on Wednesday. The global equity markets continue to rise amid signs of easing US-China trade tensions and US President Donald Trump's decision to give flexibility on tariffs to US carmakers. This, along with a modest US Dollar (USD) uptick, is seen as a key factor undermining demand for the safe-haven precious metal.
Meanwhile, Trump's rapidly shifting stance on trade policies has been received poorly by investors and led to a mass pivot away from US assets recently. Adding to this, prospects for more aggressive policy easing by the Federal Reserve (Fed), amid heightened concerns over the economic impact of tariffs, might continue to act as a headwind for the USD. This, in turn, lends some support to the non-yielding Gold price and helps limit the downside, warranting some caution for bearish traders.
President Donald Trump signed an order on Tuesday to ease tariff effects on the auto industry, giving carmakers two years to increase the share of domestic parts in US-assembled vehicles. This adds to the optimism over progress on trade negotiations and signs of the potential de-escalation of US-China trade tensions.
The US Dollar attracts some buyers for the second straight day and also acts as a headwind for the Gold price. Investors, however, remain on the edge as Trump's erratic trade policies continue to fuel worries about a sharp economic slowdown. Moreover, bets that the Federal Reserve will resume its rate-cutting cycle soon should cap any meaningful USD upside.
Source; fxstreet
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