Gold prices forecast hit a two-week high as U.S. bond yields dropped, showing signs of a slowing job market. This increases the chances that the Federal Reserve may cut interest rates in September. Investors are now waiting for the U.S. jobs report for more details.
Why Gold Prices Are Rising
Gold prices forecast are going up because people are worried about a possible economic slowdown in the U.S. The Federal Reserve might take a more cautious approach. Although a big rally like earlier this year is unlikely, gold prices are still over $2,300. Additionally, 10-year U.S. Treasury yields are at their lowest in two months, which helps gold prices rise.
Focus on Upcoming Jobs Data
Traders are eagerly waiting for the U.S. jobs data, which will give more clues about the labor market and what the Federal Reserve might do next. According to a Reuters poll, many analysts expect the Fed to cut interest rates in September, and possibly again later in the year, though some think there might be fewer cuts.
Predictions for Federal Reserve Rate Cuts
Most experts expect two rate cuts this year, even with market ups and downs. Recent data shows slower U.S. economic growth and high inflation. As a result, some Federal Reserve officials are in no rush to cut rates, and the latest predictions may show fewer cuts than expected.
Inflation’s Impact on Rate Cuts
High inflation and low unemployment make it harder to cut rates soon. Key measures like the PCE price index, which the Fed watches closely, are not expected to hit the 2% target until at least 2026. The unemployment rate is also expected to stay at 3.9% until 2027, showing a tight labor market. With the U.S. economy likely to grow by 2.4% this year, major rate cuts seem less likely.
Positive Outlook for Gold
With the current economic signals and the Fed’s cautious approach, the short-term outlook for gold looks good. Lower interest rates make gold more attractive, as it doesn’t earn interest. However, if U.S. inflation picks up, it could push gold prices down, making upcoming data important for market direction.
Gold Price Technical Analysis
Despite recent drops, XAU/USD showed strength by holding at the 50-day moving average at $2,340.81. This is the nearest support level.
If it falls below this level, prices could drop to $2,277.34. On the other hand, if momentum continues, the price might test the pivot at $2,402.37, with $2,450.13 being the final resistance before reaching a new high.
Conclusion
Gold prices are expected to rise in the short term due to the weak job market and possible rate cuts. Keep an eye on upcoming economic data to understand market trends. Internal link: Daily Gold Signal, External link: Daily Gold Update.
