Amid persistent inflation and the Federal Reserve’s (Fed) hesitation to cut interest rates, the gold price (XAU/USD) maintained its ascent, trading robustly around $2,342 with a peak at $2,344.39 on the day.

The uplift in gold’s valuation is largely due to a declining US dollar, which struggled to find support despite a hawkish Fed amid a risk-on market environment. Additionally, a substantial rally in the Japanese Yen (JPY) further weakened the dollar.

US Dollar Downtrend Amid Fed’s Interest Rate Outlook

Despite a clear hawkish signal from the Federal Reserve regarding interest rates, the US dollar exhibited a downtrend, contributing to the buoyancy in gold prices.

Market participants are now focused on the Fed’s forthcoming interest rate decision, with expectations leaning towards maintaining the current rate range of 5.25% to 5.5%.

Although the US economy shows resilience, surging inflation levels have sparked speculation that any potential rate reductions may not occur until September.

Impact of Economic Indicators on Market Sentiments

Recent data from the US Bureau of Economic Analysis indicated that the Personal Consumption Expenditures (PCE) Price Index rose by 0.3% in March, surpassing the anticipated 2.6% and marking a year-on-year increase to 2.7% from 2.5% in February. Meanwhile, the core PCE Price Index held steady at 2.8%, exceeding forecasts of 2.6%.

These figures further solidified the expectations of a continued hawkish stance from the Fed, exerting pressure on the traditionally non-yielding gold.

Geopolitical Risks Amplify Gold’s Safe-Haven Status

The persistent geopolitical tensions arising from the Russia-Ukraine conflict and the Israel-Hamas confrontations remain significant factors enhancing gold’s appeal as a safe-haven asset.

Notably, Ukraine’s strategic attacks on Russian infrastructure and appeals for increased military aid from the US have heightened geopolitical instability, bolstering gold prices.

Despite ongoing ceasefire negotiations in Egypt, continued military actions approved by Israel amidst heavy casualties underscore the enduring volatility and uncertainty, fostering increased demand for gold.

XAU/USD Price: Technical Analysis Update