Article details
Gold prices (XAU/USD) retreated from last week's highs on Monday, reaching session lows just above $4,650. The decline follows diminished expectations of aggressive Federal Reserve rate cuts, which had previously supported gold as a hedge against inflation. Market participants are now focusing on upcoming U.S. economic data and potential Fed policy shifts to gauge further price direction.
The bearish move highlights the sensitivity of gold to U.S. monetary policy. A delayed Fed easing cycle would weaken gold's appeal, as higher real interest rates make non-yielding assets less attractive. Traders should monitor the 4,650 level as critical support, with a break below this threshold potentially triggering deeper declines. Conversely, a rebound above 4,800 could signal renewed buying interest.
For Gulf investors, the current environment underscores the importance of balancing gold holdings with other inflation-protected assets. The Saudi Arabian Monetary Authority's (SAMA) stance on local currency policy and regional economic stability will also influence regional gold demand. Key watchpoints include the Fed's June meeting and U.S. nonfarm payrolls data in the coming weeks.
