Spot gold showed some strength on Thursday and Friday, bouncing back nearly 2% from its weekly low of $2293 to reach $2339. However, the metal faced some headwinds ahead of the key US PCE inflation data release on Friday. Despite the recovery, spot gold closed with a loss of $1 at $2326 on Friday, ending the week up around 0.30%.
US Dollar Index reacts to political developments
The US Dollar Index saw some movements in response to political developments, gaining ground on news of Trump gaining an edge over Biden in the presidential debate on Friday. The index closed with a small loss of 0.04% at 105.84 on Friday, with a marginal increase of around 0.04% for the week.
Fed’s stance and economic data
Federal Reserve officials have maintained a hawkish stance, emphasizing the need for more evidence before considering rate cuts. Recent economic data, including the US Q1 GDP figures and PCE inflator data for May, have been in line with expectations but show mixed results in terms of personal consumption and inflation metrics.
Key data and events to watch
Traders are keeping an eye on upcoming events such as the French and UK elections, JOLTs job openings, ISM manufacturing, ISM services, and the nonfarm payroll report. Analysts expect strong job market indicators in the upcoming nonfarm payroll report, supported by robust PMI data.
Insight: Rising inflation pressures
Recent CPI inflation data from Australia, Japan, and Canada have come in higher than anticipated, highlighting the risk to the disinflation theme. In this context, developed economies are facing sticky inflation challenges, which could influence the trajectory of gold prices.
Outlook and analysis
Based on current data and events, the outlook for gold remains uncertain, with potential pressure from hawkish Fed rhetoric and strong economic indicators. However, unexpected shifts in Fed policy or political outcomes could sway market sentiment. Traders may consider selling into rallies in the short term, with support levels at $2300/$2277 and resistance at $2350/$2370/$2385.
In summary, while gold has shown resilience in the face of economic uncertainties, ongoing developments in inflation and central bank policies will be crucial factors shaping its future performance.
Spot gold showed some strength on Thursday and Friday, bouncing back nearly 2% from its weekly low of $2293 to reach $2339. However, the metal faced some headwinds ahead of the key US PCE inflation data release on Friday. Despite the recovery, spot gold closed with a loss of $1 at $2326 on Friday, ending the week up around 0.30%.
US Dollar Index reacts to political developments
The US Dollar Index saw some movements in response to political developments, gaining ground on news of Trump gaining an edge over Biden in the presidential debate on Friday. The index closed with a small loss of 0.04% at 105.84 on Friday, with a marginal increase of around 0.04% for the week.
Fed’s stance and economic data
Federal Reserve officials have maintained a hawkish stance, emphasizing the need for more evidence before considering rate cuts. Recent economic data, including the US Q1 GDP figures and PCE inflator data for May, have been in line with expectations but show mixed results in terms of personal consumption and inflation metrics.
Key data and events to watch
Traders are keeping an eye on upcoming events such as the French and UK elections, JOLTs job openings, ISM manufacturing, ISM services, and the nonfarm payroll report. Analysts expect strong job market indicators in the upcoming nonfarm payroll report, supported by robust PMI data.
Insight: Rising inflation pressures
Recent CPI inflation data from Australia, Japan, and Canada have come in higher than anticipated, highlighting the risk to the disinflation theme. In this context, developed economies are facing sticky inflation challenges, which could influence the trajectory of gold prices.
Outlook and analysis
Based on current data and events, the outlook for gold remains uncertain, with potential pressure from hawkish Fed rhetoric and strong economic indicators. However, unexpected shifts in Fed policy or political outcomes could sway market sentiment. Traders may consider selling into rallies in the short term, with support levels at $2300/$2277 and resistance at $2350/$2370/$2385.
In summary, while gold has shown resilience in the face of economic uncertainties, ongoing developments in inflation and central bank policies will be crucial factors shaping its future performance.
