During the North American session, gold prices experienced a decline of approximately 0.4%, influenced by a strong US Dollar and decreasing US Treasury bond yields. With a limited economic calendar in the United States (US), investors are closely monitoring Federal Reserve (Fed) officials’ statements following last Friday’s US employment report.
The XAU/USD pair is currently trading at $2,315 after reaching a daily peak of $2,329. The prevailing narrative in financial markets revolves around the timing of potential Fed policy easing in response to softer economic data. April’s Nonfarm Payrolls report, released by the US Department of Labor, revealed a lower-than-expected addition of 175,000 jobs, falling short of estimates and trailing March’s upwardly revised figure of 315,000.
Following the release of this data, the CME FedWatch Tool indicated an increase in the likelihood of a quarter-point interest rate cut in September, rising from 55% before the report to 85%.
However, recent comments from Minneapolis Fed President Neel Kashkari, expressing a more hawkish stance by suggesting the Fed may maintain interest rates and even consider raising them if inflation does not decrease, contributed to the strength of the US Dollar.
Looking ahead, the economic calendar for the week will feature additional remarks from Fed officials, along with the release of Initial Jobless Claims for the week ending May 4 and the preliminary University of Michigan Consumer Sentiment index. These events will likely continue to shape market expectations regarding future Fed policy actions and impact the direction of gold prices in the coming sessions.
