Gold Prices Forecast: Steady-to-Bullish Outlook as Non-Farm Payrolls Data Looms

Gold Prices Steady as Investors Await Key Economic Data

Gold prices remained stable on Monday as U.S. Treasury yields held firm, with traders cautious ahead of critical economic data releases that could influence the Federal Reserve’s interest rate decisions. The metal logged a gain of over 4% in the second quarter, reflecting ongoing market volatility.

At 10:39 GMT, XAU/USD is trading $2331.12, up $4.40 or +0.19%.

Rising Treasury Yields and Inflation Data

On Monday, U.S. Treasury yields edged higher as investors anticipated key economic reports. The 10-year Treasury yield rose 7 basis points to 4.412%, and the 2-year yield climbed over 3 basis points to 4.758%. Recent data showed the personal consumption expenditures (PCE) price index slowed to its lowest annual rate in over three years in May. Core PCE, excluding food and energy, increased by 0.1% monthly and 2.6% annually, meeting Dow Jones estimates. Headline inflation remained flat month-over-month, also rising 2.6% on an annual basis.

Focus on Labor Market Data

This week’s focus includes several significant labor market reports, such as job openings, ADP’s private payrolls, and the June nonfarm payrolls data. Should these indicators suggest a cooling labor market, it could bolster hopes for interest rate cuts. Additionally, manufacturing sector data and construction spending figures due Monday will further inform market sentiment. Notably, a recent rise in the 10-year Treasury yield has diminished the appeal of non-yielding assets like gold.

Anticipation of Fed Chair Powell’s Remarks

Investors are eagerly awaiting Fed Chair Jerome Powell’s remarks on Tuesday, followed by the release of the Fed’s latest policy meeting minutes on Wednesday, and the nonfarm payrolls data on Friday. Powell’s adherence to a data-driven approach suggests that softer payroll numbers could lift gold prices. Analysts forecast gold could soar to $2,600 by year-end, driven by expected Fed rate cuts, with short-term support at $2,275.

Market Sentiment and Dollar Influence

Recent data indicated unchanged U.S. prices in May, with moderate consumer spending growth. Current market sentiment suggests a 63% probability of a Fed rate cut in September, with another expected in December. Additionally, political developments in France have strengthened the euro, weakening the U.S. Dollar Index, which tends to support dollar-denominated gold prices.

Market Forecast

Given the steady economic indicators and potential for further rate cuts, the outlook for gold prices is cautiously bullish. While short-term fluctuations may occur, supportive data could propel gold prices higher in the coming months, providing opportunities for traders.

Technical Analysis