Gold prices (XAU/USD) continued their upward trend on Friday, showing resilience even as the US Dollar (USD) made a modest recovery. The yellow metal gained traction as concerns about a weakening labor market and renewed geopolitical tensions bolstered expectations of potential interest rate cuts by the Federal Reserve (Fed) to stimulate economic growth.
Economists anticipate that a softening labor market could prompt the Fed to implement interest rate cuts sooner than previously expected, which is viewed as favorable for gold prices. Additionally, geopolitical uncertainties are contributing to the positive sentiment surrounding gold in the market.
However, the hawkish stance of some Fed officials regarding interest rates and the strength of the US Dollar may exert downward pressure on gold prices. Traders are closely monitoring key events and speeches, including the release of the US Michigan Consumer Sentiment Index for May and speeches from Fed officials Bowman, Goolsbee, and Barr.
Looking ahead, market focus will shift to the upcoming US Consumer Price Index (CPI) report next week, which is expected to provide further insights into inflationary pressures and potential monetary policy actions by the Fed.
Despite potential headwinds, gold prices are maintaining upward momentum driven by economic and geopolitical factors. The interplay between Fed policy signals, US economic data, and global events will continue to influence gold’s trajectory in the near term. Investors and traders remain attentive to developments that could impact gold prices in the coming days.
