Gold prices are rising, reflecting cautious investor optimism, despite a strengthening US dollar and Treasury yields. The Fed’s limited interest rate cuts dampened hopes for aggressive easing. This continues to put pressure on gold’s upward potential. Analysts point to upcoming US labor market data that could trigger volatility and impact gold price forecasts.
Fed interest rate expectations affect sentiment in the gold market
Federal Reserve Chairman Jerome Powell’s comments on Monday signaled that future moves would likely be limited to quarter-point cuts. This dampened hopes for aggressive interest rate cuts. Powell emphasized that the Fed is “in no rush” to rapidly cut interest rates after positive economic data reinforced confidence in growth. Low interest rates reduce the opportunity cost of holding non-yielding assets. Therefore, this cautious stance affected gold prices. It also provided support to gold prices in general.
Analysts suggest this week’s labor market data, including ADP employment and nonfarm payrolls, could influence the Fed’s approach. A weaker-than-expected labor report is likely to revive hopes for more aggressive easing. This is likely to provide support to gold prices. The probability of a 25 bps cut in November has risen to 63% from 47% last week, according to CME’s FedWatch tool.
Impact of upcoming economic reports on market outlook
Investors will closely monitor U.S. data due later this week, including manufacturing and services indexes from the Institute for Supply Management (ISM). Friday’s nonfarm payrolls report will provide more insight into the health of the U.S. labor market. So it’s going to be particularly critical. It is possible that strong labor force data may reduce the likelihood of further rate cuts. This is likely to put downward pressure on gold. Conversely, any sign of economic weakening could renew support for the shiny metal, especially if it strengthens expectations for a more aggressive Fed response.
Geopolitical tensions and central bank demand
cryptokoin.comAs you follow from , gold continues to find support from geopolitical uncertainties, including Israel’s possible military action against Hezbollah in Lebanon. Political risks generally increase the attractiveness of gold as a safe haven. However, Goldman Sachs states that factors such as the easing of geopolitical risks and the decrease in demand from central banks may limit the upward movement of gold. Weak ETF inflows and declining retail demand from China also stand as potential constraints on future price rallies.
Gold price forecast: Shift from neutral to bear!
Market analyst James Hyerczyk evaluates the outlook and technical picture of the gold market. Gold rose on Tuesday despite strengthening US Dollar and Treasury yields. This reflects cautious optimism among investors. The market trading in Monday’s range shows indecision. It also points to potential volatility ahead. If it gains momentum, it is possible for gold to retest the record level of $2,685.64. However, a failure to maintain current levels would lead to a test of the minor pivot at $2,616.25. A break below this support could reveal downside targets near $2,546.86 and $2,531.77.
In the short term, gold prices are likely to wait for important US labor force data and Fed signals. Therefore, it will remain range-bound for now. It’s possible that a stronger-than-expected employment report could add downward pressure. This is likely to push gold below $2,616.25. Additionally, it is likely to potentially test deeper support levels. Conversely, weaker data is likely to revive bullish momentum. For now, the downside risks outweigh the near-term upside potential. Therefore, the outlook remains neutral to bearish.
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