Gold prices started the new week with more positive momentum after ending last week in the green zone, thus ending a series of four consecutive weeks of losses.
With this week's economic calendar relatively light, market focus is expected to shift to the development of US economic data and new clues on the direction of the Federal Reserve's (Fed) monetary policy.
At 9 am, gold prices were trading at $4,180, up 0.12% since it opened in early trading on Monday in the Asian session.
Last week, gold prices were pressured after tensions between the United States and Iran escalated again following a gunfight near the Strait of Hormuz
Sentiment also began to change as investors took a cautious approach following Fed Chairman Kevin Warsh's speech. Although Warsh maintained an aggressive stance on inflation and gave no clear indication of a cut in interest rates, his remarks failed to provide continued support for the US dollar.
In addition, the change in sentiment became more pronounced on Thursday as the US dollar came under selling pressure following a sharp strengthening of the Japanese yen and the release of weaker-than-expected Non-Farm Payrolls (NFP) data.
The US economy added just 57,000 jobs in June compared to market expectations of 110,000, while a revision to April and May data showed actual job growth was 74,000 lower than initially estimated.
The data raised expectations that the Fed may take a more cautious approach to interest rates in the near term. The probability of a rate hike at the July meeting also fell to around 15%, compared to almost 30% before the jobs report was released.
In response, gold prices jumped more than 2% on Thursday, recording their biggest daily gain since mid-June.
Nevertheless, the market still sees the probability of the Fed implementing at least one more rate hike before the end of the year as high, around 80%.
This week, the market will focus on the US ISM Services PMI data on Monday and the FOMC Minutes early Thursday morning, which are expected to be the main catalysts for gold price movements.
The PMI reading will provide an updated picture of the strength of the US services sector, while the FOMC minutes will be scrutinized for new clues on the direction of the Federal Reserve's (Fed) interest rate.
Any signs of a slowing economy or a more dovish Fed tone could potentially support gold's rise, while strong data and a continued hawkish Fed stance could put pressure on the precious metal.
Thus, gold's movements this week are expected to continue to be influenced by US economic data, dollar movements and any new statements from Fed officials.
