- Gold prices are trading around $2345 an ounce at the start of this week's trading, as caution gripped markets ahead of the Federal Reserve's policy meeting and the US monthly jobs report this week.
- Investors are eagerly awaiting clues on the Fed's monetary stance after recent US economic data eased expectations of rate cuts.
According to economic data releases, US personal consumption expenditure readings were largely in line with expectations but pointed to continued inflationary pressures. On the other hand, the GDP report indicated that the US economy may not be as resilient as previously thought, after growing at a 1.6% annualized rate in the first quarter of 2024, the slowest in two years. Now, traders expect the Fed to cut rates only once this year, down from three earlier in the month. Rising interest rates tend to reduce the attractiveness of gold, which does not yield a return. However, the metal's price is still supported by strong physical demand from China amid a weak yuan, a volatile stock market, and relatively low deposit rates, prompting investors to seek alternatives for their savings.
Another factor affecting sentiment towards the gold market is that the yield on the 10-year US Treasury fell below 4.65% after hitting its highest level since early November. Moreover, the investors await the Fed's policy decision on Wednesday, along with the monthly US jobs numbers due out on Friday. Furthermore, the central bank is widely expected to keep interest rates at 5.25%-5.50% and reiterate that borrowing costs will not come down until policymakers are confident that inflation is moving towards their 2% target.
Attention will then turn to Fed Chair Jerome Powell's comments for further insights into the Fed's timing of rate adjustments. Especially, after data releases pointing to continued inflation and slowing economic growth in the first quarter. On the macro front, US non-farm payrolls are expected to rise by 243,000 in April, down from a gain of 303,000 the previous month.
On the other hand, US stock indexes rose on Monday, building on last week's gains, as investors geared up for a week packed with major earnings reports and a Federal Reserve interest rate decision. According to trading, the S&P 500 and Nasdaq rose 0.3%, while the Dow Jones gained 148 points.
Meanwhile, the US central bank is largely expected to keep borrowing costs unchanged, although investors will pay close attention to changes in the FOMC's speech following a hotter-than-expected set of inflation data for March and the first quarter. Concurrently, Tesla shares rose by 15.8%, leading gains for shares of giant technology companies after the company obtained approval from the Chinese authorities to deploy its driver assistance system. Earnings season will reach its peak with reports from heavyweights Amazon, Eli Lilly, Coca-Cola, McDonald's, MasterCard, Qualcomm, Pfizer, ADP, Apple, ConocoPhillips, Amgen, Booking.com and Cigna.
Among the major companies, Apple and Amazon shares added 2.5% and 0.7%, respectively.
Gold Price Forecast and Analysis Today:
The price of gold achieved weekly gains of 0.3% and rose by 13.4% since the beginning of the year 2024 to date. Over the past 12 months, the price of the precious metal has increased by 18%. According to the performance on the daily chart, the price of gold is in a neutral position.
Technically, the tendency is still more towards the rise, as the factors for its gains continue, which are represented by the increase in global geopolitical tensions and the increase in central banks’ purchases of gold. Furthermore, we still prefer to buy gold from every falling level, and the closest support levels for gold are currently $2320, $2300, and $2265, respectively. Ultimately, bulls' eyes are still strongest towards the $2,400 per ounce resistance.
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