It's Data Packed Week - RSBL

Gold prices edged higher on Monday, helped by a retreat in the dollar and bond yields, while investors awaited a slew of U.S. economic data this week for more clues on interest rate outlook.

Gold has started the new week on a strong note as the FX market largely remains range-bound in part due to a UK holiday. It's up $7 to $1921 after touching $1925, which was the highest in more than two weeks.

The dollar eased against rivals, making gold less expensive for other currency holders. The benchmark 10-year Treasury yields held below their recent peak. 

Looking ahead, the precious metal will be very sensitive to incoming US economic reports, given the pledge by the Federal Reserve Bank (Fed) to proceed with caution after having already delivered 525 basis points of cumulative tightening since March 2022 in its most aggressive hiking cycle in four decades

This is the unofficial last week of summer for the U.S. Look for the marketplace to become more active next Tuesday, following the three-day U.S. Labor Day weekend holiday. This is a big week for U.S. economic reports, so traders and investors are likely to become at least a bit more tuned in as the week progresses. The U.S. economic data pace picks up rapidly on Tuesday and it’s a big data week.

Some Important data releases are due this week- 

● U.S. personal consumption expenditures price index report due on Thursday

● The August US nonfarm payrolls (NFP) report due out on Friday is likely to provide valuable information on the outlook and guide the Federal Open Market Committee's (FOMC’s) decision-making process, so traders should follow the release closely.

● The strength or weakness of the NFP survey will be pivotal for the US dollar and gold prices, significantly shaping their near-term trajectory by influencing the Fed’s tightening roadmap.

To sum up, the Gold Price has the majority of catalysts needed for the further upside but $1,940 and broad US Dollar weakness, as well as the downbeat yields, will decide the further advances of the precious metals and the dollar

The U.S. economy is set to enter a period of very low growth combined with persistent inflation, and this means precious metals like gold and silver are likely to see significant prices increases.

While we will not rule out the potential for additional upside action in gold and silver prices today, bullish classic fundamental supply and demand information is not overtly clear for the bull camp. Nonetheless, the outlook for China has improved minimally and the charts in gold and silver prices have improved thereby allowing for some follow-through gains. We suggest longs use stops on gold at $1937, with stops in September silver at $24.07.

All Eyes On Important US Data - RSBL

Last week gold witnessed a series of whipsaws as traders are being dependent on US data releases. Gold swung into action in the range of 1900-1950 $.

Gold was little changed on Monday as investors awaited U.S. inflation data that could influence the Federal Reserve’s policy stance, 

The Labor Department’s employment report on Friday showed the U.S. economy added the fewest jobs in 2-1/2 years in June, but persistently strong wage growth pointed to still-tight labour market conditions.

Bullion prices have dropped more than 7% since reaching near-record levels in early May as investors scaled back expectations of an end to the Fed’s rate-hiking cycle.

Gold prices edged higher on Tuesday as the dollar and bond yields fell ahead of U.S. inflation data that could offer more cues on the Federal Reserve’s rate-hike path.

Longer-dated U.S. Treasury yields fell on Tuesday as investors awaited Wednesday's inflation data for further clues on whether price pressures are abating and if the Fed is closer to the end of its rate-hiking cycle.

Sticky inflation is widely expected to attract more rate hikes from the Fed, with the central bank set to raise rates by at least 25 basis points in an end-July meeting.

Higher interest rates dull the appeal of gold, which pays no interest

Recent comments from Fed officials reiterated that while the central bank was close to reaching its peak interest rates, interest rates will still rise in the near-term. U.S. rates are also expected to remain higher for longer.

While the prospect of an eventual end to the Fed’s rate hike cycle buoyed gold, higher-for-longer rates are expected to keep any further gains in the yellow metal limited, given that they increase the opportunity cost of holding bullion.

We favour the downside in gold and silver, but suggest traders avoid selling palladium. However, the control of the precious metal markets sits with outside markets, with the dominating force determined by which market (dollar or US interest rates) exhibits the biggest price moves.

The focus this week will be on U.S. CPI (Consumer Price Index) data due on Wednesday after last week’s Fed minutes showed a vast majority of the policymakers expected further policy tightening.There is a massive eye on tomorrow's inflation data - it comes too late in the day for the July meeting. That hike is basically sealed and it would take something pretty weak on the inflation side to change that.