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Gold prices (XAU/USD) remain under pressure amid diminished expectations of aggressive Federal Reserve rate cuts, which have pushed U.S. Treasury yields higher and strengthened the U.S. dollar. Despite a negative bias, the precious metal has failed to break below key support levels, suggesting limited selling momentum. The Fed's recent policy signals and inflation data have shifted market focus toward a more hawkish stance, reducing demand for gold as an inflation hedge. The dollar's resilience against gold is critical for traders monitoring the USD's broader strength. Higher bond yields typically attract capital inflows into U.S. assets, indirectly weakening gold's appeal. This dynamic could pressure gold further if the Fed delays rate cuts, which would bolster the dollar and increase opportunity costs for holding non-yielding assets like gold. For Gulf investors, the interplay between Fed policy and gold prices will remain pivotal. The Saudi riyal's peg to the dollar means regional gold prices are indirectly influenced by USD movements. Traders should watch the Fed's upcoming policy statements and U.S. inflation data for clues on rate-cut timing, which could trigger short-term volatility in gold and related commodities.
