Gold Rallies Ahead of CPI Data

Gold is up 0.50%, trading at $2341.29 per ounce at the time of writing. Earlier on Monday, gold’s jump to $2,354 has been tempered by evolving Fed rate cut expectations and a resilient US jobs report. Potential further upside for Gold is expected with forecasts reaching up to $2,500 in more bullish scenarios.

The market recalibration on the Federal Reserve’s interest rate policy reflects a balanced outlook. Gold’s rally continues amid higher US Treasury yields and less likelihood of additional rate cuts by the Federal Reserve. The latest employment report saw the economy adding more jobs than expected, while the Unemployment Rate dropped.

The chances of a rate cut in June are 50%, while for July they stand at 69%. Fed officials remain optimistic about cutting rates but emphasize the need to be patient. The US Department of Labor announced that Nonfarm Payrolls increased by 303,000 in March, higher than anticipated 200,000 and the previous 270,000. The Unemployment Rate decreased modestly to 3.8% from 3.9%, with Average Hourly Earnings meeting consensus predictions.

Geopolitical risks loom following Israel’s attack on Iran’s embassy in Syria, which could pressure Gold prices upward. The World Gold Consortium revealed that the People’s Bank of China was the largest buyer of the yellow metal, increasing its reserves by 12 tonnes to 2,257 tonnes. Investors are focusing on the upcoming US Consumer Price Index (CPI) data for March, which will offer additional insights into the potential timing for the Federal Reserve to commence lowering its interest rates. Strong price pressure may dampen expectations for rate cuts in June, while softer inflation figures could fuel speculation for rate reductions.

Gold’s rally is set to continue with buyers gathering momentum. The Relative Strength Index (RSI) aims north, with the first resistance being the all-time peak at $2,354.