(MENAFN- Daily Forex)
Gold prices have returned to the $2355 resistance level despite a steady US dollar ahead of the May US jobs report due later this week. Overall, the US nonfarm payrolls report will be closely watched as investors look for clues about the timing of a potential Fed rate cut, especially after recent economic data raised speculation that the central bank has room to lower rates this year.
According to reliable trading platforms, traders are currently pricing in a 65% chance of a US rate cut in September, according to the CME FedWatch tool. Meanwhile, the Bank of Canada is expected to cut rates, and the European Central Bank is expected to follow suit on Thursday. Elsewhere, global central bank net purchases of gold rose to 33 metric tons in April from a revised 3 tons in March, indicating strong demand despite rising prices, according to the World Gold Council factors affecting gold
The US Dollar Index (DXY). Recently, DXY rose above the 104.4 mark, extending its recovery from a two-month low of 104 touched on June 3, as strong economic data raised uncertainty over the size of the US interest rate cuts the Federal Reserve will deliver this year. Also, ISM data showed that US service sector activity expanded by the most in nine months in May, well above market expectations, and the improvement in credit conditions was tempered by weak JOLTs and ADP labor market releases.
As a result, markets were almost split on whether to cut rates by the US Federal Reserve or two this year. Meanwhile, dovish expectations from other G10 monetary authorities have helped the US Dollar Index rebound significantly.
Yesterday, the Bank of Canada has begun its rate-cutting cycle, and the ECB is likely to follow suit this week. Moreover, slowing inflation has raised bets on a Bank of England rate cut after the UK elections in July, and growth concerns are making the Bank of Japan reluctant to make another rate hike.
The yield on the 10-year US Treasury briefly fell to 4.29% before recovering to 4.34%, remaining near a two-month low as investors became increasingly convinced that the Fed would make a first-rate cut in September. Furthermore, the ADP report showed that the US private sector added 152,000 jobs in May, well below expectations of 175,000. Additionally, yesterday's JOLTS report also came below expectations, while the ISM manufacturing PMI released on Monday showed a surprise decline in factory activity. On the other hand, the ISM services PMI showed surprisingly strong growth in the services sector.
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Gold Price Forecast and Analysis Today:
According to the performance on the daily chart attached, gold is in a neutral position with an upward bias and bulls will control the general trend if gold moves towards the resistance levels of 2370 and 2385 and then the psychological resistance of $2400 per ounce again. So far, we still prefer to buy gold from every downtrend. Ultimately, the geopolitical tensions and global central bank buying are supporting the gold market a lot.
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