At 11:44 GMT, XAU/USD is trading $2661.48, up $5.37 or +0.20%.
Traders are focusing on the US jobs report and Federal Reserve policy
Gold prices have been largely unchanged ahead of the US jobs data. Investors are cautious because the results could significantly influence the Federal Reserve’s monetary policy and future interest rate decisions. Gold, which typically performs well during periods of low interest rates, has already staged a strong rally in recent weeks. However, rising US Treasury yields and a stronger US dollar are currently providing some headwinds for further gold price gains.
Nitesh Shah, commodity strategist at WisdomTree, noted that gold’s recent uptrend may be on a temporary pause due to these opposing forces. “Gold has had a very good run in recent weeks, so it is not surprising that it is not moving up significantly… US Treasury yields have risen and the dollar has appreciated, providing some headwinds despite the geopolitical tailwinds,” said Shah.
Geopolitical tensions provide safe haven support
While gold is under pressure from rising rates and a stronger dollar, escalating geopolitical tensions continue to provide support for the safe haven. US President Joe Biden’s recent refusal to publicly negotiate with Israel over Iranian oil facilities, along with Israel’s ground incursion into Lebanon to combat Hezbollah, has kept geopolitical risks at the forefront. Historically, the price of gold has tended to rise during periods of conflict and instability as investors seek refuge in the metal.
Gold demand in India is showing modest improvement
In addition to global factors, domestic demand for gold in India has improved slightly this week ahead of a major festival, although overall demand remains weak due to high prices. Higher gold prices have dampened buying interest in one of the world’s largest gold-consuming countries.
Market forecast: Gold price outlook mixed, but volatile
As traders focus on the US Non-Farm Payrolls report, the outlook for gold remains mixed. A weaker-than-expected jobs report could raise expectations for a dovish stance from the Federal Reserve, potentially leading to a rally in gold prices, possibly back towards the $2,683 mark.