Gold is struggling to build on last week’s massive climb to a new record high.
The gold price (XAUUSD) rose to a new record high on Friday after the US jobs report indicated an increase in the unemployment rate. Bolstering hopes that the Federal Reserve (Fed) will begin cutting rates in June. The momentum, however, paused ahead of the $2,200 round figure threshold amid a late US Dollar (USD) rally from its lowest level since mid january. Which tends to damage the A commodity denominated in US dollars. During Monday’s Asian session, the precious metal remained below the aforementioned mark. Attracting some intraday sellers near the $2,189 level.
Bullish traders choose to reduce their positions. Despite severely overbought conditions on the daily chart. Ahead of the release of the latest US consumer inflation data on Tuesday.
Extremely overbought conditions limit the metal’s gains despite a minor USD increase.
The critical US CPI report will influence market expectations regarding the Fed’s rate cutting path. Driving USD demand and providing new impetus to the non yielding yellow metal. Meanwhile, speculations that the Fed will ease monetary policy soon maintain US Treasury bond yields low. Which could assist limit any substantial correction in the XAUUSD.
Daily Market Movers: Gold Price Continues could profit from increased wagers on an anticipated Fed rate decrease action in June.
Data released on Friday revealed that the US unemployment rate increased to its highest level in two years. Raising expectations for a Federal Reserve rate decrease in June and pushing the gold price to a new record high.
The headline NFP revealed that the US economy added 275 new jobs in February, versus the 200K expected. However the prior month’s number was reduced down to 229K from 353K reported.
Furthermore, wage inflation, as defined by the change in average hourly earnings, increased by 4.3% year on year, falling short of market estimates and January’s gain of 4.4%.
The prospect of a May The Fed’s interest rate decrease surged to over 30% following the important jobs report, however the June policy meeting remains the most likely timing for any such move.
The yield on the 10-year US government bond fell to a more than one-month low, sending the US dollar to its lowest level since mid-January and benefiting the non-yielding metal.
Bets on a Fed rate drop in June provide a headwind for the USD and should limit losses.
A minor USD increase drives some intraday sellers throughout Monday’s Asian session, but firming views for an impending shift in the Fed’s policy stance should help limit losses.
Furthermore, geopolitical tensions, combined with forecasts that the global economy will worsen in 2024, may continue to drive flows into the safe-haven XAUUSD, acting as a tailwind.
Investors are looking forward to the The newest US consumer inflation numbers will be released on Tuesday, providing new clues regarding the Fed’s rate-cutting course and positioning for the next leg of a directional shift.
