Gold Creeps Higher, But Headwinds Still Impact Near-Term Price Action

The gold price has edged higher so far this week, regaining some of its significant losses from Thursday and Friday last week, although there are still concerns that the US Federal Reserve will continue to hike rates and weigh on the yellow metal's price.

While ithas risen slightly, spot gold is still below the $1,900 level, currently trading at around $1,874 an ounce. 

It hit its lowest level since January 6 on Friday but gained 0.11% on Monday and a further 0.41% so far today. Meanwhile, Bitcoin, the cryptocurrency labelled “digital gold,” is up more than 39% this year, although it also fell last week with experts continuing to debate the value of gold vs crypto.

The gold decline last week followed US jobs data that revealed a sharp increase, with the US unemployment dropping to 3.4%, the lowest since 1969. Meanwhile, non-farm payrolls came in at 517k, well above the previous 260k and forecast of 190k.

The news impacted the possibility of rate cuts later in the year. According to Reuters, interest rate futures traders now expect eventual cuts to begin in November compared to the previous expectation of September. They add that they now see rates peaking at 5.06% in June.

As a result, the dollar has strengthened, weighing down gold with bearish traders now potentially eyeing the potential key level around the $1,830 mark.  

Reuters quoted Edward Meir, a metals analyst at Marex, as saying that he sees gold prices ranging between $1,820-$1,950. However, he adds that looking ahead, they are more constructive, especially once the focus switches back to “the likelihood of falling rates and a weaker dollar.”