Gold prices are still struggling to break through the $4,700 resistance level at the beginning of the week following stronger-than-expected US (US) NFP data, thus strengthening sentiment towards the country’s economy.
This week, market attention will be focused on the direction of US inflation as well as the latest geopolitical developments in the Middle East.
At 9.20 am, gold prices were trading at $4,969, down 0.38% since it opened at the beginning of Monday’s trading in the Asian session.
The US (US) NFP report last Friday was seen as stronger than market expectations, thus supporting the strengthening of the US dollar.
The US economy added around 115,000 jobs in April, surpassing market expectations of around 62,000 to 65,000 jobs. At the same time, the unemployment rate remained stable at 4.3%, reflecting the US labor market which is still in a strong state.
Meanwhile, developments in the Strait of Hormuz and the US-Iran conflict continue to be the focus of global markets even as peace talks continue.
Iran has reportedly sent an official response to the US peace proposal through Pakistan as a mediator, with talks focusing more on efforts to temporarily halt the fighting and reopen trade routes in the Strait of Hormuz.
However, US President Donald Trump has reportedly rejected part of Iran's response and described it as unacceptable, indicating that the talks have not yet reached a full agreement.
For now, the main focus of the market this week will be on US inflation data, particularly the Consumer Price Index (CPI) and Producer Price Index (PPI) which are expected to determine the next direction of the Fed's monetary policy.
US CPI data scheduled for release on Tuesday is expected to increase to around 3.7%, driven by still high inflationary pressures following rising energy prices due to the Middle East conflict and tensions in the Strait of Hormuz.
The combination of tense geopolitical sentiment, strong US economic data and rising inflation expectations continues to put pressure on gold's movement to break through the current resistance level, with investors now remaining cautious in assessing the true direction of the safe-haven asset.
