Gold price (XAU/USD) retreats from a nearly two-week high, around the $3,345-3,346 area touched this Thursday, and trades with a mild positive bias during the early European session.

A modest US Dollar (USD) uptick is seen as a key factor behind the commodity's intraday pullback, though any meaningful downside seems elusive. The growing acceptance that the Federal Reserve (Fed) will lower borrowing costs further in 2025 and worries about rising US deficit should cap the USD, which should act as a tailwind for the non-yielding yellow metal.

Meanwhile, US fiscal concerns, along with a sluggish US economic growth outlook and renewed US-China trade tensions, temper investors' appetite for riskier assets.

This is evident from a generally weaker tone around the equity markets and should contribute to limiting the downside for the safe-haven Gold price. Moreover, acceptance above the $3,300 mark suggests that the path of least resistance for the XAU/USD pair is to the upside. Hence, any corrective slide could be seen as a buying opportunity and is more likely to remain cushioned.

Source: Fxsteet