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Gold prices have corrected from their highest level in the last two weeks at $1,858. Although the US dollar continues to decline, gold prices seem to be losing momentum amid positive sentiment.
Market attention this week will be focused on the speech of the US Federal Reserve (FED) Chairman, Jerome Powell, and the very important US nonfarm payrolls data.
Powell will deliver a speech on the semi-annual monetary policy report, and the market is expecting some clues about the policy outlook. Therefore, market players are ready to respond quickly to significant market fluctuations.
Meanwhile, the market estimates that there is about a 30% chance of a 50 basis point (bps) rate hike at the March meeting. In February, the US ISM Services PMI Friday fell slightly to 55.1, while the US ISM services price index was better than expected at 65.6 vs. 64.5.
The upbeat figures indicate rising inflationary pressures, which strengthen the argument for a larger interest rate hike.
However, the US dollar failed to capitalize on this weakness on Friday, as profit-taking ahead of the weekend weighed heavily on the greenback. As a result, gold prices briefly rose and reached a two-week high above $1,850.
In a situation where there is no significant US economic data released, gold prices are likely to be influenced by broad market sentiment and US dollar dynamics, in addition to Treasury yields.
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This analysis is based on fundamental and technical views from trusted sources, not advice or invitation. Always remember that this content is intended to enrich the reader's information. Always use independent research first regarding other forex information to be used as a reference in your trading.
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