Gold price (XAU/USD) kicks off the new week on a weaker note and erodes a part of Friday's strong gains to over a two-week high, though the downtick lacks bearish conviction.

US President Donald Trump's decision to delay the implementation of tariffs on the European Union (EU) adds to the recent optimism and undermines demand for the safe-haven precious metal. However, a combination of factors holds back traders from placing aggressive bearish bets around the commodity.

Investors remain on edge in the wake of worries over the worsening US fiscal health and persistent geopolitical risks stemming from the protracted Russia-Ukraine war and conflicts in the Middle East.

This is seen as acting as a tailwind for the Gold price. Meanwhile, the growing market acceptance that the Federal Reserve (Fed) will lower borrowing costs further drags the US Dollar (USD) to a fresh monthly low and further contributes to limiting losses for the non-yielding yellow metal.

In a mega U-turn, US President Donald Trump delayed the implementation of a 50% tariff on the European Union from June 1 until July 9. Earlier on Sunday Ursula von der Leyen, president of the European Commission, said that the EU was ready to move quickly in trade talks with the U.S. but needed more time to strike a deal.

Trump's sweeping tax cuts and spending bill, which would add an estimated $4 trillion to the federal primary deficit over the next decade, was passed in the lower house last week and will be voted on in the Senate this week. This adds to worries that the US budget deficit could worsen at a faster pace than previously expected.

Source: Fxstreet