Gold Takes a Breather After Hitting All-Time High: 3 Key Trends to Watch

Gold prices eased slightly after hovering above $2,900 an ounce this month, as investors booked profits amid a stronger dollar. On Thursday, spot gold slipped 0.38% to $2,905 in the bullion market. Concerns over global trade wars owing to Trump's tariff call and rising bond yields are among the key factors impacting the price of the yellow metal.

Over the past month, gold prices have jumped over 7% in the commodity market, ranking among the top performing assets this year so far. The yellow metal’s gains have clearly outpaced the returns of major stock markets around the world. For instance, domestic benchmark indices, Sensex and Nifty, have dropped around 5% during the same period.

According to the GoodReturns website, the price of 24-carat gold declined on Thursday, with ten grams of the yellow metal trading at Rs 80,640. "Comex gold remained range-bound between $2,930 and $2,955, continuing its consolidation phase over the past few sessions. Market participants are now focused on the upcoming PCE Price Index, which could act as the next major trigger, alongside ongoing developments in Trump's tariff policies," said Jateen Trivedi, VP Research Analyst-Commodity and Currency at LKP Securities.

Here are 3 key trends to watch out ahead-

1.Fed Rate Cuts

Despite a slower-than-expected trajectory of the rate cut cycle by the US Federal Reserve, analysts are expecting a modest 50 basis points cut this year. This might keep the price of gold steady as investors remain worried about major geopolitical events playing out in the background.

"Gold prices traded steady after retreating from recent record highs, as safe-haven demand remained strong amid uncertainty surrounding U.S. trade tariffs and slowing economic growth," said Manav Modi, senior analyst, commodity research at Motilal Oswal Financial Services.

2.Strong US Dollar

While the dollar index remains on a robust road, inflation continues to be a major concern. If fears over CPI data rise alongside low consumer confidence, gold might surge as a hedge.

"The US dollar remains relatively steady around 106, supported by weaker economic data, which in turn benefits metal prices," Modi said. US consumer confidence dropped below expectations, falling below the 100 mark, indicating growing concerns about the overall sentiment, he further added.

3.Key Data Releases

While macro developments remain in focus, investors' focus will now shift to key data releases, including the PCE Price Index.

"Attention now turns to key data releases, including US GDP and pending home sales later today, while US inflation data will be closely watched by market participants tomorrow," Modi said.