Gold prices surged nearly 1% during Monday’s North American session, fueled by a resurgence in risk appetite amid growing expectations that the US Federal Reserve (Fed) could initiate policy easing sooner than previously anticipated. This sentiment was spurred by the latest Nonfarm Payrolls (NFP) report released last Friday, which revealed a continued but sluggish pace of job creation in the US economy.
The XAU/USD pair is currently trading around $2,320, having rebounded from daily lows of $2,291. The recent US employment data has increased the likelihood of a Fed interest rate cut by a quarter of a percentage point in September 2024.
Market participants are closely analyzing the latest US economic indicators, with April’s NFP report coming in below expectations. Should the upcoming inflation report also fall short of projections, traders’ speculation about a potential US interest rate reduction later this year would gain further validation.
Federal Reserve officials have recently made notable statements. Richmond Fed President Thomas Barkin expressed skepticism about inflationary trends, stating that he has not observed evidence suggesting inflation is accelerating, and indicated that current policy measures are sufficiently restrictive. Meanwhile, New York Fed President John Williams highlighted that the labor market is moderating and emphasized the Fed’s comprehensive analysis of economic data, hinting at eventual rate adjustments.
The convergence of these factors has bolstered gold prices, as investors adjust their positions in response to evolving expectations surrounding US monetary policy. The precious metal remains a focal point for traders amid ongoing economic uncertainties and the prospect of policy adjustments by the Federal Reserve.
