Global gold prices fell during these moments of trading, today, Monday, as traders await more US economic data this week, after recent data showed that inflation stabilized and boosted hopes that the Federal Reserve will cut interest rates later this year.
“The short-term catalyst for gold will be the US jobs data, and if it shows a bit of a slowdown in the labor market, that will be good for gold prices,” said Kyle Rodda, a financial markets analyst at Capital.com.
Meanwhile, investors are awaiting the release of the US ISM Purchasing Managers' Index (PMI) reading today at 17:00 Saudi time, the ADP employment report on Wednesday and the non-farm payrolls data due on Friday to gauge the state of the US economy and whether that will prevent the Federal Reserve from cutting interest rates at its September meeting or not.
Gold is getting a bit of a boost after the marginally lower-than-expected personal consumption expenditures (PCE) numbers supported the idea that the Federal Reserve could cut interest rates this year, Rodda added.
Data on Friday showed U.S. inflation held steady in April, adding to bets on a September interest rate cut. The U.S. core personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, rose 0.2% from the previous month in April, after a 0.3% increase in March, the slowest pace of increase since the start of the year and below market expectations for a 0.3% gain.
But the data showed the core personal consumption expenditures inflation measure held steady in April at 2.8% year-on-year, unchanged from the previous month, the lowest since March 2021 but still well above the Federal Reserve's 2% target.
Traders currently see about a 54% chance of a cut in September, compared to about 49% before the report.
While bullion is considered a hedge against inflation, rising interest rates increase the opportunity cost of holding non-yielding assets.
According to Reuters technical analyst Wang Tao, if spot gold breaks the support at $2,319 per ounce, it may drop towards $2,302.
Gold at settlement on Friday
Gold futures prices deepened their losses during trading on Friday, as investors assessed expectations of monetary easing in the United States, following the release of economic data.
At settlement, gold futures for August delivery - the most active - fell 0.85%, or $20.7, to $2,345.8 per ounce, recording a weekly loss of 0.45%, but the yellow metal achieved a monthly gain of 0.9%, continuing its rise for the third consecutive month.
Gold and dollar now
Gold futures are now down 0.4% at $2,336 an ounce.
