Gold (XAU) Price Forecast: Will Key U.S. Data Trigger a Gold Price Breakout?

Gold Marginally Lower on U.S. Bank Holiday; Focus on Upcoming Economic Data

Gold prices edged lower on Monday, reflecting a quiet trading session due to the U.S. bank holiday. Market activity remained subdued as major players stayed on the sidelines, anticipating key U.S. economic data releases later in the week, including the critical Non-Farm Payrolls report on Friday. The Federal Reserve’s upcoming policy meeting on September 17-18 also looms large, keeping traders cautious.

At 10:56 GMT, XAU/USD is trading $2500.13, down $3.27 or -0.13%.

Gold Prices Under Pressure from Stronger U.S. Dollar

Gold dropped to its lowest level in over a week on Monday, weighed down by a strengthening U.S. dollar. The dollar’s firming trend, driven by rising long-term Treasury yields and reduced expectations for aggressive Fed rate cuts, made gold less attractive to holders of other currencies. The dollar’s strength was particularly evident against the euro and yen, with the greenback reaching a two-week high against the euro and its strongest level against the yen since August 21.

Rate Cut Uncertainty Keeps Gold Rangebound

Gold has been rangebound between $2,531.77 and $2,470.85 since August 22, hovering around its pivot point of $2,501.31. Market participants are keenly awaiting clarity on the extent of the Federal Reserve’s anticipated rate cut in September. The CME FedWatch tool indicates a 69% probability of a 25-basis-point cut, while the chance of a more significant 50-basis-point cut stands at 31%. Lower interest rates typically benefit gold by reducing the opportunity cost of holding the non-yielding asset.

Key U.S. Economic Data in Focus

Traders are closely monitoring a series of upcoming U.S. economic data releases, including ISM surveys, JOLTS job openings, ADP employment, and the Non-Farm Payrolls report. Economists surveyed by Reuters expect an increase of 165,000 jobs in August, up from 114,000 in July, with the unemployment rate potentially dipping to 4.2%. Strong employment data could solidify expectations for a 25-basis-point rate cut at the Fed’s September meeting.

Market Forecast: Gold Likely to Stay Rangebound

Given the current market conditions and the looming uncertainty over the Fed’s rate decision, gold prices are expected to remain within their recent range. A stronger dollar and rising U.S. Treasury yields could continue to apply downward pressure on gold. However, if the upcoming U.S. economic data fails to meet expectations, it could prompt a shift in market sentiment, potentially leading to a breakout in gold prices. For now, traders should expect continued consolidation as the market awaits clearer signals from the Fed and key economic indicators.