Gold prices (XAU/USD) continued their downward trend on Monday, falling to around $3,025 during early Asian trading. This marks a decline after the precious metal hit an all-time high on Thursday, fueled by hopes for a peace agreement in Ukraine. However, the potential for future interest rate cuts by the U.S. Federal Reserve (Fed) and lingering economic uncertainties could prevent significant gains for gold in the near term.
Over the weekend, Ukrainian and U.S. officials met in Riyadh, Saudi Arabia, to resume efforts toward resolving the ongoing conflict in Ukraine. The discussions, which come as President Donald Trump advocates for a ceasefire, were described as “productive and focused” by Ukrainian Defense Minister Rustem Umerov. Key points of the conversation included proposals to protect energy infrastructure and critical facilities. Delegates from both the U.S. and Russia are set to hold separate talks on Monday. The positive momentum from these peace talks has reduced demand for gold, traditionally viewed as a safe-haven asset during times of geopolitical instability.
On the flip side, expectations of further interest rate cuts from the Federal Reserve may help limit gold’s losses. After maintaining steady interest rates during their January and March meetings, Fed officials signaled a cautious outlook, awaiting clearer progress on disinflation. Projections now suggest the possibility of two rate cuts in 2025.
Fed Chair Jerome Powell recently commented on how U.S. President Trump’s policies, such as import tariffs, have contributed to slower economic growth and higher inflation. Despite gold’s status as a traditional safe haven, Alex Ebkarian, chief operating officer at Allegiance Gold, noted that the metal has yet to fully act as a refuge for retail investors. “We’re not in a recession yet, but the economic slowdown may create further uncertainty, which could drive increased demand for safe-haven assets like gold,” Ebkarian said.
As geopolitical and economic developments continue to unfold, gold’s trajectory remains uncertain, with potential for both upward and downward movement depending on external factors.
