Gold saw robust gains on Monday, climbing over 0.50% as US Treasury yields ascended. Despite trading above last week’s low of $2,277, the precious metal remains on the defensive amidst broad US Dollar strength ahead of critical US economic data releases. The XAU/USD pair is currently trading at $2,311.
Last week’s US Nonfarm Payrolls report for May indicated ongoing resilience in the labor market, with 272,000 jobs created, surpassing the estimated 185,000. Although the report also revealed a slight increase in the Unemployment Rate, Average Hourly Earnings saw a modest uptick.
Focus on US Inflation Report and Fed Monetary Policy Decision
This week’s US inflation report holds significant importance, with most analysts expecting inflation to remain stable, potentially reaffirming the Federal Reserve’s commitment to keeping interest rates elevated. However, a reacceleration in inflation could prompt Fed officials to adjust their rhetoric, potentially leading to further losses for the non-yielding metal.
Following the release of US inflation data, market attention will turn to the Fed’s monetary policy decision and the update of the Summary of Economic Projections (SEP). Any hints of a hawkish stance in the message or the dot plot could trigger volatility in financial markets.
US Treasury Yields and Dollar Index Influence Gold Dynamics
Meanwhile, the US 10-year Treasury note yield has edged up by three-and-a-half basis points to 4.47%, presenting a headwind for gold prices. Consequently, the DXY, an index measuring the US Dollar against six other currencies, has risen by 0.23% to 105.17, further impacting the performance of the precious metal.
