Gold prices are seen to have maintained a ‘sideway’ position at around $4,050 for several weeks as market players are still assessing the direction of the Fed’s interest rates and monitoring the US-Iran war conflict situation that could push global inflation to record highs.
At 9 am, gold prices were trading at $4,059, up 0.40% since it opened early Monday in the Asian session.
The yield on the 10-year US Treasury bond remained high at around 4.7% as investors continued to assess the direction of the Federal Reserve’s (Fed) monetary policy.
This week’s market focus is now shifting to the US NFP economic data which is expected to provide an indication of whether the Fed still has the potential to raise interest rates in the next meeting.
Last week, the Fed maintained interest rates as expected. At the same time, economic data showed that US growth was slowing as Gross Domestic Product (GDP) grew lower than in the previous quarter.
Core PCE inflation also fell slightly, signaling that price pressures are easing, but still above the Fed's target.
Despite the rate being maintained, several Fed officials have signaled that inflation risks are not over yet.
Dallas Fed President Lorie Logan, Cleveland Fed President Beth Hammack and Minneapolis Fed President Neel Kashkari each said that current interest rates may not be tight enough to ensure inflation returns to the 2% target.
Following the development, market expectations for a rate hike at the September meeting are decreasing.
The probability of the Fed keeping rates unchanged is now higher than last week, reflecting confidence that the central bank may choose to wait for more economic data before making its next decision.
At the same time, US consumer sentiment showed a slight improvement, indicating that consumers are still confident about the economic situation.
However, geopolitical developments and persistently high crude oil prices continue to be factors that have the potential to increase inflationary pressures again, thus remaining the main risks that the market will watch throughout the week.
