On Friday, the price of gold (XAU/USD) saw a resurgence, attracting dip-buying activity and reversing a significant portion of the previous day’s decline, edging closer to the $2,150 level, which marks the weekly low. Despite the release of a hotter-than-expected US Producer Price Index (PPI), market sentiment continues to reflect an increased likelihood of the Federal Reserve (Fed) initiating interest rate cuts in June. This sentiment is further reinforced by a decline in US Treasury bond yields, failing to stimulate meaningful buying interest in the US Dollar (USD). Additionally, a prevailing weakness in equity markets has provided some support to the safe-haven appeal of gold.
However, despite the uptick in gold prices, the precious metal remains within a familiar range observed since the beginning of the week, as traders await further clarity on the Fed’s rate-cut trajectory before committing to fresh directional positions. This cautious stance is particularly relevant given the overbought conditions observed on the daily chart and with the upcoming two-day FOMC meeting scheduled to commence next Tuesday.
Looking ahead, Friday’s US economic calendar includes key releases such as the Empire State Manufacturing Index, Industrial Production figures, and the Preliminary Michigan Consumer Sentiment Index. These data points may provide additional impetus to market movements on the final trading day of the week, potentially influencing the trajectory of gold prices amid ongoing speculation surrounding Fed policy decisions. Traders are advised to exercise caution and monitor developments closely in anticipation of potential market shifts in response to economic indicators and central bank announcements.
