The recent half-percentage point interest rate cut by the Fed, combined with China’s initiative with new stimulus measures, has fueled buying interest. Meanwhile, ongoing geopolitical tensions have further strengthened gold’s appeal.
“We expect the next surge to come from ETF investors, whose investments are still significantly below their previous peak,” said Giovanni Staunovo, a commodities analyst at UBS.
“With weaker US economic data, the Fed is likely to cut rates further, potentially pushing gold prices up to $2,900 per ounce over the next 12 months.”
US economic data, to be released during the session, includes ISM Manufacturing PMI and JOLTS job openings. Analysts expect the ISM Manufacturing PMI to rise slightly to 47.6, while vacancies are expected to decline from 7.67 million to 7.64 million.
If data shows weakness in the labor market or manufacturing sector, this could reinforce expectations of further Fed rate cuts.
This week, market participants will be closely watching several key U.S. economic indicators, including the ADP employment report (forecast: 145,000) and the highly anticipated nonfarm payrolls data (forecast: 144,000) due to be released Friday.