Key points
Gold prices edged lower on Monday, with spot gold slipping by 0.1% to $2,650.79 per ounce. This comes after last Friday’s strong US jobs data cooled hopes for a more aggressive Federal Reserve rate cut next month. US gold futures, however, rose by 0.1% to $2,670.20.
The data showed the largest increase in job gains over the last six months, coupled with a drop in the unemployment rate to 4.1%, indicating a robust labour market.
Traders have adjusted their expectations for the November Fed meeting, with the CME’s FedWatch tool showing a 95% probability that the Fed will implement only a 25 basis point cut, compared to earlier projections of a 50 basis point reduction.
The revised outlook followed remarks from Chicago Fed President Austan Goolsbee, who called the jobs report “superb” and noted that continued strength in the labour market could reinforce the view that the economy is at full employment with low inflation.
Gold, traditionally viewed as a safe-haven asset, tends to perform better in a low interest rate environment or during periods of economic and political uncertainty.
However, with the prospect of a smaller rate cut and stronger economic data, traders may see less urgency in seeking refuge in gold, explaining its subdued performance.
Picture: Gold consolidates in a tight range with key levels at $2,632 and $2,670, awaiting fresh drivers for a breakout, as seen on the VT Markets app.
The XAUUSD-ECN chart above shows a consolidation phase with prices hovering around $2,646.05. The recent low of $2,632.05 and high of $2,670.19 reflect a range-bound movement, which suggests that gold prices are awaiting a catalyst to break out of the range.
The 30-period moving averages (MA) are flattening, indicating that the market lacks a clear directional momentum at the moment.
Watch for any breakout from the current range, especially as Middle East tensions and U.S. inflation data can drive the next trend.
This week, the market will closely watch the minutes from the Fed’s latest policy meeting, as well as key US inflation data, including the Consumer Price Index (CPI) and Producer Price Index (PPI).
These indicators will offer more clarity on inflationary pressures and the Fed’s potential moves on interest rates. Additionally, several Federal Reserve officials are scheduled to speak throughout the week, which could further shape market expectations.
Trending news: Strong Jobs Data Fuels Fed Dilemma
Rising tensions in the Middle East, particularly with Israel’s military actions against Hezbollah targets in Lebanon and the Gaza Strip, are adding another layer of uncertainty to the market.
Although the impact of these tensions on precious metals has been limited, any escalation could potentially reignite demand for safe-haven assets like gold.
Market participants remain cautious as they await further economic data and geopolitical developments, which could influence the direction of both interest rates and safe-haven demand.
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