Gold (XAU) Daily Forecast: Will Trendline Sustain Buying Above $2378 Today?

This reduced traders’ expectations for a September rate cut, causing the U.S. dollar and Treasury yields to rebound.

Despite the pullback, softer-than-expected consumer price index (CPI) readings have set gold up for a 0.7% weekly gain. The metal remains near its record high of over $2,430 an ounce, though reaching this level soon appears unlikely.

Economic Data Impacting Gold (XAU/USD) Price

Gold (XAU/USD) showed a bearish trend on Friday, falling back from near $2,400. Earlier gains were driven by softer-than-expected U.S. inflation data for April, which had increased hopes for Fed rate cuts.

However, Fed officials’ cautious stance on maintaining higher borrowing costs has dampened these expectations, strengthening the U.S. dollar and reducing demand for gold.

With no significant U.S. economic data released, market participants are focusing on statements from Fed officials, including Kashkari, Waller, and Daly, speaking later on Friday.

Other Factors Impacting Gold Price

Recent data showed weekly Initial Jobless Claims rose to 222K for the week ending May 11, up from 232K the previous week and above the 220K estimate. Housing Starts increased by 5.7% month-over-month to 1.36 million in April, while Building Permits fell by 3% to 1.44 million.

Atlanta Fed President Raphael Bostic indicated signs of cooling inflation but prefers to wait for May and June data to confirm the trend. Cleveland Fed President Loretta Mester noted that it’s too early to judge if inflation progress has stalled, while Richmond Fed President Tom Barkin emphasized the need to keep borrowing costs high to meet inflation targets.

Financial markets now see a nearly 75% chance of a Fed rate cut in September, up from 65% earlier in the week. Markets are also anticipating full 25 basis point cuts before the end of the year, according to the CME FedWatch Tool.