For the second consecutive day, gold has attracted buyers, maintaining its position just below the overnight peak as the European session approaches. Spot gold rose by 0.2%at $2,335.86 per ounce.

- The release of the US GDP report on Thursday revealed a significant loss of growth momentum at the outset of 2024, coupled with an unwelcome uptick in inflation. This development has provided some support to the precious metal.

- However, the current upward movement lacks strong bullish conviction, as evidenced by renewed US Dollar buying driven by expectations of a hawkish Federal Reserve.

- Investors are increasingly convinced that the US central bank will postpone interest rate cuts amid persistent inflationary pressures, leading to elevated US Treasury bond yields and renewed demand for the USD.

- Moreover, a generally optimistic sentiment prevailing in equity markets is tempering gains for safe-haven gold prices. Traders are now eagerly awaiting the release of the US Personal Consumption Expenditures Price Index, seeking insights into the Fed's approach to interest rate adjustments and anticipating the next directional move for the non-yielding yellow metal.

- The latest US GDP report, highlighting a notable slowdown in economic growth and persistent inflation, underscores the supportive role of gold prices. According to data from the US Commerce Department, the largest economy in the world expanded by a modest 1.6% at an annualized rate in the first quarter, marking its weakest performance since mid-2022.

- Furthermore, underlying inflation surpassed expectations by rising to 3.7% in the first quarter, reinforcing expectations of prolonged higher interest rates by the Federal Reserve.

- The surge in yields on the benchmark 10-year US government bond, triggered by mixed economic data, is posing a challenge for gold as a non-yielding asset. Additionally, easing concerns about further geopolitical tensions in the Middle East is dampening the appeal of safe-haven assets, further restraining the upside potential for gold.

- Amidst these developments, US Dollar bulls remain cautious, awaiting further clarity on the Fed's monetary policy direction, with particular emphasis on the release of the Personal Consumption Expenditures Price Index.

- The forthcoming inflation data is anticipated to be pivotal in shaping the Fed's future policy decisions and influencing USD demand, thereby guiding the short-term trajectory of the commodity.

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