Concerns about potential trade tariffs under former President Trump and fears of a global trade war have cast a supportive shadow over bullion markets. As tensions simmer, traders are exercising caution, refraining from making fresh bets on the XAU/USD pair. Market participants are keenly anticipating upcoming PMI reports that could provide clearer direction.
The XAU/USD pair currently finds itself undermined by a broad rebound of the US Dollar. Despite this, the underlying bearish sentiment towards the USD might help limit potential losses for the pair. Market analysts note that distinct economic dynamics are at play in the US, eurozone, and UK, which could influence currency movements.
In Europe, GBP/USD is trading at its highest level in two months, surpassing 1.2650 during the European session on Friday. This surge is attributed to positive UK data, with Retail Sales rising by 1.7% in January, providing a boost to the Pound Sterling. Meanwhile, EUR/USD remains pressed near 1.0500 in early trading as market participants weigh economic indicators.
The attractiveness of US repo rates has been drawing attention, with expectations that bills will appreciate further. Speculation is rife that the Federal Reserve might cut rates more than previously anticipated, a move that mirrors potential actions by the UK. This monetary policy speculation continues to shape market sentiment and currency valuations.
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