Gold (XAU/USD) prices turned positive after an intraday dip to $3,275-3,274 region as geopolitical risks emanating from the Russia-Ukraine war, rising tensions in the Middle East, and the India-Pakistan border revived safe-haven demand. Additionally, a modest US Dollar (USD) pullback from near one-month highs touched on Friday turned out to be another factor that acted as a tailwind for the commodity.

With the intraday move higher, the XAU/USD pair, for now, seems to have snapped two consecutive days of losing streak, though its upside potential seems limited. The optimism led by the US-UK trade deal and the start of US-China negotiations over the weekend remain supportive of the positive risk tone. Further, a hawkish pause by the Federal Reserve (Fed) could limit any meaningful USD corrective slide and cap the non-yielding Gold prices.

Daily Market Movers Summary: Gold prices benefit from renewed safe-haven demand, modest USD decline

US President Donald Trump and UK Prime Minister Keir Starmer announced a limited bilateral trade deal on Thursday that keeps 10% tariffs on goods imported from the UK. Additionally, US Commerce Secretary Howard Lutnick told CNBC that Washington will roll out dozens of trade deals over the next month, although the 10% tariffs imposed on most countries are likely to remain in place.

Furthermore, the Trump administration is reportedly considering lowering tariffs on China to 50% from 145% as early as next week, which added to market optimism and may cap the XAU/USD pair. US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will meet with their Chinese counterparts in Switzerland on Saturday to discuss trade and economic issues.

The Federal Reserve indicated on Wednesday that it is not inclined to cut interest rates anytime soon despite heightened uncertainty about the economic outlook. However, the US Dollar weakened after hitting a four-week high during the Asian session on Friday, benefitting Gold prices.

Russia and Ukraine reported attacks on their forces on the first day of a three-day unilateral ceasefire called by Russian President Vladimir Putin. Further, Israel's escalation with the Iran-backed Houthis in Yemen and fears of a wider military conflict along the India-Pakistan border kept geopolitical risks at bay. This turned out to be another factor that acted as a tailwind for the safe-haven precious metal.

A number of influential FOMC members are due to speak on Friday. Investors will look for more cues on the Fed's future rate-cutting path, which in turn, will play a key role in driving the USD demand and provide a fresh boost to the commodity, which remains on track to post a modest weekly gain. (Newsmaker23)

Source: FXstreet