Gold (XAU/USD) slipped below the $3,400 mark during Monday’s Asian session, pressured by improved risk appetite that reduced demand for the safe-haven asset. The metal fell sharply to the $3,368–$3,367 range before trimming some losses, supported by dovish US Federal Reserve expectations and lingering geopolitical uncertainties.
Investor sentiment improved after gains in Asian stocks and US equity futures, fueled by hopes that the upcoming meeting between US President Donald Trump and Russian President Vladimir Putin could pave the way toward ending the war in Ukraine. This risk-on mood triggered heavy selling in gold early in the session.
However, uncertainty ahead of the August 12 US-China tariff deadline and renewed US Dollar weakness have helped limit further declines. Market participants now widely expect the Fed to resume rate cuts in September, with at least two quarter-point reductions anticipated by year-end. These expectations strengthened following July’s disappointing US jobs data, which pointed to a softening labor market.
Comments from Fed officials last week reinforced the dovish outlook. St. Louis Fed President Alberto Musalem warned of risks to both inflation and employment, while Governor Michelle Bowman said labor market fragility supports her projection for three rate cuts this year.
This week’s key US inflation releases—Consumer Price Index (CPI) on Tuesday and Producer Price Index (PPI) on Thursday—along with speeches from top Fed officials, will be closely watched for direction in both the US Dollar and gold prices.
