Article by: ETO Markets

Gold prices (XAU/USD) faced a pullback on Tuesday after hitting a record high. The lack of significant economic data has limited the upside potential for the precious metal. However, several factors, including increased expectations for US Federal Reserve (Fed) interest rate cuts, ongoing geopolitical tensions, and strong demand from central banks and Asian buyers, continue to provide support.

Key Factors Influencing Gold Prices

1. Fed Rate Cut Bets: Traders are anticipating possible rate cuts by the Fed, which could boost demand for gold as a hedge against lower interest rates.
2. Geopolitical Tensions: Ongoing global uncertainties are driving investors to seek the safety of gold.
3. Strong Demand: Central banks and Asian buyers are showing increased interest in gold, supporting its price.

Gold traders should watch for insights from Fed officials speaking later on Tuesday, the release of the FOMC Minutes on Wednesday will also be crucial. A hawkish tone from these announcements could strengthen the US dollar, potentially putting downward pressure on USD-denominated gold prices.

According to the CME FedWatch Tool, investors see a 76% chance of a 25 basis point rate cut in September and anticipate two cuts by the end of the year.

Stay tuned for further developments and updates on how these factors will shape the future of gold prices.