Gold prices experienced a slight retreat on Monday, stepping back from record highs of $2,354 reached during the mid-North American session. The persistent upward trajectory of the yellow metal comes amidst elevated US Treasury yields and diminishing prospects for additional rate cuts by the Federal Reserve (Fed). Despite a stronger-than-anticipated US Nonfarm Payrolls report released last Friday, gold’s ascent continued, showcasing its resilience as a non-yielding asset. At the time of reporting, XAU/USD stands at $2,327, marking a modest gain of 0.30%.
The primary drivers fueling gold’s rally remain expectations of Fed rate cuts and significant central bank purchases. Notably, Wall Street banks are adjusting their forecasts upward in response to prevailing market dynamics. Citi analysts, as reported by Marketwatch, have revised their three-month forecast to $2,400, with a more bullish scenario projecting gold to reach $2,500.
Recent employment data depicted a stronger-than-expected job market performance, coupled with a decline in the Unemployment Rate. Concurrently, expectations surrounding Fed rate cuts are undergoing adjustments, with investors speculating a potential delay in rate reduction. Market sentiment suggests a 50% probability of a rate cut in June, with a higher likelihood (69%) of such action taking place in July.
Fed officials maintain a cautiously optimistic outlook regarding potential rate cuts, emphasizing the importance of patience amidst evolving economic conditions.
