Gold price (XAU/USD) retreats from the vicinity of the $3,400 round-figure mark, or a nearly four-week peak touched during the Asian session on Tuesday and erodes a part of the previous day's strong gains.
A modest US Dollar (USD) recovery from the lowest level since April 22 is seen as a key factor exerting some pressure on the commodity. Apart from this, a generally positive tone around the equity markets seems to undermine demand for the safe-haven precious metal.
However, persistent trade-related uncertainties and rising geopolitical tensions might keep a lid on any optimism in the markets.
Adding to this, bets that the Federal Reserve (Fed) will lower borrowing costs again, along with concerns about the worsening US fiscal condition, should cap any meaningful USD appreciation and help limit deeper losses for the Gold price.
This, in turn, warrants some caution for the XAU/USD bears and positioning for a further intraday downfall.
The developments have heightened geopolitical risks, which might continue to weigh on investors' sentiment and offer some support to the safe-haven XAU/USD.
Furthermore, bets for at least two 25 basis points interest rate cuts by the Federal Reserve in 2025 should limit losses for the non-yielding yellow metal.
Source: Fxstreet
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