The price of gold has risen to 2368 USD per troy ounce, marking a second consecutive session of upward movement. This surge is driven by the market adjusting its expectations to the potential for future interest rate cuts by the Federal Reserve. Recent employment data, particularly from ADP, has shown that the increase in private-sector jobs in the US for May was lower than anticipated, with revisions also being made to April’s figures. This data suggests a steady yet slightly cooling employment market, fueling speculation about imminent rate cuts.
According to the CME Group’s FedWatch tool, there is a 70% likelihood of two rate cuts by the Federal Reserve in 2024, with expectations of easing as soon as September. With the focus now on the upcoming comprehensive labor market reports from the US, market participants are eager to gain further insights into the overall economic health and the possible direction of monetary policy.
The recent actions taken by various central banks worldwide are also impacting the price of gold. For example, the Bank of Canada announced its first rate cut in four years, while the European Central Bank is expected to make a similar move. These decisions are contributing to the current bullish phase that gold prices are experiencing.
Looking at the technical analysis of XAU/USD, it is evident that gold has broken out of a consolidation range and is on track to potentially reach 2395.00 USD. The MACD indicator supports this bullish outlook, with signals pointing towards further upward movement. Similarly, the Stochastic oscillator suggests a continuation of the upward momentum in the market.
Investors are advised to keep a close eye on upcoming US employment data and global central bank decisions, as these factors could have a significant impact on the short-term price dynamics of gold. The current bullish phase in gold prices is a reflection of the shifting expectations surrounding US monetary policy and the actions taken by central banks around the world.
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