Gold prices edged higher on Monday, helped by a retreat in the dollar and bond yields, while investors awaited a slew of U.S. economic data this week for more clues on interest rate outlook.
Gold has started the new week on a strong note as the FX market largely remains range-bound in part due to a UK holiday. It’s up $7 to $1921 after touching $1925, which was the highest in more than two weeks.
The dollar eased against rivals, making gold less expensive for other currency holders. The benchmark 10-year Treasury yields held below their recent peak.
Looking ahead, the precious metal will be very sensitive to incoming US economic reports, given the pledge by the Federal Reserve Bank (Fed) to proceed with caution after having already delivered 525 basis points of cumulative tightening since March 2022 in its most aggressive hiking cycle in four decades
This is the unofficial last week of summer for the U.S. Look for the marketplace to become more active next Tuesday, following the three-day U.S. Labor Day weekend holiday. This is a big week for U.S. economic reports, so traders and investors are likely to become at least a bit more tuned in as the week progresses. The U.S. economic data pace picks up rapidly on Tuesday and it’s a big data week.
Some Important data releases are due this week-
- U.S. Personal Consumption Expenditures price index report due on Thursday
- The August US nonfarm payrolls (NFP) report due out on Friday is likely to provide valuable information on the outlook and guide the Federal Open Market Committee’s (FOMC’s) decision-making process, so traders should follow the release closely.
- The strength or weakness of the NFP survey will be pivotal for the US dollar and gold prices, significantly shaping their near-term trajectory by influencing the Fed’s tightening roadmap.
To sum up, the Gold Price has the majority of catalysts needed for further upside but $1,940 and broad US Dollar weakness, as well as the downbeat yields, will decide the further advances of the precious metals and the dollar
The U.S. economy is set to enter a period of very low growth combined with persistent inflation, and this means precious metals like gold and silver are likely to see significant price increases.
While we will not rule out the potential for additional upside action in gold and silver prices today, bullish classic fundamental supply and demand information is not overtly clear for the bull camp. Nonetheless, the outlook for China has improved minimally and the charts in gold and silver prices have improved thereby allowing for some follow-through gains. We suggest longs use stops on gold at $1937, with stops in September silver at $24.07.