Why Is Gold (XAU/USD) Losing Shine Below $2,350? | Key Factors Driving Precious Metal Volatility

The 0.1 eth to usdgold market (XAU/USD) opened the week on a softer note, trading around $2,325 during Asian hours as investors digested mixed signals from global markets. This modest pullback comes despite supportive factors that typically bolster the precious metal's appeal.Recent US inflation data showed encouraging signs of cooling, with the May PCE Price Index meeting expectations at 2.6% annually. However, Federal Reserve officials remain cautious about declaring victory over price pressures. San Francisco Fed President Mary Daly emphasized the need for patience, noting that rates might need to stay elevated if inflation proves persistent.Several Fed speakers reinforced this cautious tone last week. New York Fed's John Williams highlighted ongoing inflation concerns, while Governor Michelle Bowman suggested the central bank remains prepared to adjust policy if needed. These hawkish-leaning comments create headwinds for non-yielding assets like gold, as higher interest rates increase the opportunity cost of holding bullion.Market participants are now awaiting the US ISM Manufacturing PMI release for June, with forecasts suggesting a modest improvement to 49.0 from May's 48.7 reading. This data point could influence short-term trading sentiment in the gold market.Offsetting these bearish factors, geopolitical uncertainties continue to provide underlying support. The evolving political situation in France following parliamentary elections and ongoing Middle East tensions maintain demand for traditional safe-haven assets. CNN reports suggest these factors might limit the US dollar's strength, potentially creating a more favorable environment for gold in the medium term.The gold market currently reflects this tug-of-war between fundamental drivers. While cooling inflation might normally support gold, the Fed's reluctance to signal imminent rate cuts creates uncertainty. Technical traders note that the $2,300-$2,350 range remains critical, with a sustained break in either direction likely to determine the next significant move.As the week progresses, traders will monitor additional economic indicators and central bank commentary for clearer signals about the Fed's policy path. The interplay between macroeconomic data and geopolitical developments continues to shape gold's unique position as both an inflation hedge and safe-haven asset in today's complex financial landscape.