Gold price trading softer near $2,295 on Monday as investors eye Fedspeaks and US economic data. The Nonfarm Payrolls for April came in weaker than expected, with a rise of 175K compared to 315K in March. The US Dollar Index edges higher to 105.12, bouncing off nearly one-month lows. The downbeat US economic data led to a surge in the probability of a Fed rate cut, with traders expecting 38 basis points of rate cuts by year-end. Despite climbing to $2,320 initially, gold erased its gains after hawkish remarks from Fed Governor Michelle Bowman.
Fed Governor Michelle Bowman stated in an interview that she remains willing to raise rates further if inflation progress stalls or reverses. Chicago Fed President Austan Goolsbee emphasized that the latest US employment report was solid and that current monetary policy is restrictive. These comments from Fed officials, along with a risk-on mood in the market, decreased the appeal of non-yielding metals like gold. Investors will be closely watching Fedspeaks this week, along with the first reading of the US Michigan Consumer Sentiment Index for May on Friday. The US Employment data on Friday revealed signs of a slowing economy, with the Nonfarm Payrolls coming in below expectations and the Unemployment Rate ticking up to 3.9%.
After the release of the US economic data, gold price climbed to $2,320 but later lost its gains following the hawkish comments from Fed officials. The ISM Services PMI falling into contractionary territory in April further added to concerns about the US economy. The weaker-than-expected Nonfarm Payrolls have raised expectations of a Fed rate cut, with traders anticipating a significant cut by the end of the year. Fed Governor Bowman’s willingness to raise rates if inflation stalls or reverses indicates a hawkish stance from the central bank, contrasting with the market’s expectations of a rate cut.
In response to the downbeat US economic data, the US Dollar Index bounced off one-month lows and edged higher to 105.12. This has put pressure on gold prices, which were trading softer near $2,295 on Monday. The risk-on sentiment in the market has also diminished the appeal of non-yielding metals like gold, leading to a loss in recovery momentum for the precious metal. Investors will continue to monitor Fedspeaks this week for further insights into the Fed’s monetary policy stance and its potential impact on gold prices. The first reading of the US Michigan Consumer Sentiment Index for May on Friday will also be closely watched for indications of consumer sentiment and its implications for the US economy.
