Gold advanced for the second consecutive day, as the precious metal attempts to resume its uptrend following a pullback.
However, gold’s upside potential may be constrained by diminished expectations for aggressive Federal Reserve rate cuts, influenced by strong economic data and the anticipated policies of the incoming Trump administration.
The administration’s expected focus on tax cuts and tariff increases could potentially contribute to inflation, thereby limiting the Federal Reserve’s ability to ease monetary policy.
Market participants this week have shifted their focus to statements from Federal Reserve officials, seeking further clarity on the central bank’s approach to monetary policy. Additionally, investors are closely monitoring President-elect Donald Trump’s cabinet selections, as these appointments may have an impact on economic policies.
However, gold’s appeal as a safe-haven asset has been supported in recent days by escalating geopolitical tensions, particularly the ongoing conflict between Russia and Ukraine. Moreover, concerns regarding trade uncertainties and U.S. fiscal sustainability could provide support for higher gold prices.
