Employment data in the US increased speculation that the Fed would cut interest rates, thus increasing gold prices. The Fed’s speeches this week may affect the course of gold; dovish tones can support gains. Although geopolitical calm reduces safe haven demand, monetary policy cues remain important for gold.
The impact of US employment data on gold prices
The gold price rebounded in Europe early Monday. Thus, the shiny metal broke its two-day decline. cryptokoin.comAs you follow from , the latest US employment data fell below expectations. This weakness has increased market speculation about a possible Fed rate cut in September. Thus, it contributed to the decline of the US dollar and benefited gold priced in dollars. In particular, low interest rates may reduce the opportunity cost of holding non-yielding gold bullion, thus possibly increasing its attractiveness.
US nonfarm payrolls in April increased by 175,000. Thus, it was a significant decrease from March’s revised 315,000. It was also well below expectations of 243,000. This decline strengthened expectations that the Fed would follow a more dovish policy. At the same time, the Unemployment Rate increased from 3.8% to 3.9%. Additionally, Average Hourly Earnings growth decreased to 3.9% from 4.1% in the previous month. This highlighted the potential softness in wage inflation.
Statements of Fed officials and market reactions
Upcoming speeches by Fed officials Thomas Barkin and John Williams are eagerly awaited by gold investors for more clues. Any hint of a dovish tone is likely to reinforce the current upward trend in gold prices. Additionally, recent comments from Fed Chair Michelle Bowman underscore that the risk of higher inflation remains. Bowman said they are ready to raise interest rates if necessary. This also had an impact on gold markets.
Geopolitical tensions and economic indicators
Meanwhile, easing geopolitical tensions in the Middle East is reducing traditional safe-haven demand for gold. The market’s focus remains on clues regarding monetary policy. In addition, the latest ISM Services PMI data showed a contraction, falling from 51.4 in March to 49.4 in April. It was also below expectations of 52.0. This has the potential to impact the Fed’s decisions going forward.
As the week progresses, gold prices may fluctuate depending on these economic indicators and Fed comments. The probability of a rate cut in September increased sharply after the employment report, approaching 90%. Therefore, investors are following these developments closely to gauge the potential impact on the gold market.
Gold prices forecast
Market analyst Arslan Ali comments on the technical outlook of gold. In today’s market, gold is trading slightly higher at $2309.705. The commodity is trading around the pivot point at $2,309.65. This points to a critical juncture for the next price movements. If gold clears this level, it will face immediate resistance at $2,328.74. Moreover, this will be followed by the thresholds of $2,351.65 and $2,378.36. These barriers will test gold’s ability to maintain its uptrend.
In contrast, support levels are positioned at $2,282.52, $2,254.51, and $2,230.01, which could provide stability if prices decline. The technical setup shows gold just above the 200-day EMA at $2,284.47 and slightly below the 50-day EMA at $2,316.33. This indicates potential volatility. It is possible for gold to rise above $2,285 to keep the uptrend intact. However, falling below this is likely to trigger significant sales.
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