Gold prices traded in a narrow range during the Asian period trading on Friday But it's still declining this week and trading at the lows of 2050, With some upside to the US dollar amid growing doubts about when the US central bank will start cutting rates, especially after the minutes of Wednesday's Fed meeting in which he stated that circumstances might justify keeping the interest rate at the current level for a longer period, Fed officials also expect rate cuts by the end of 2024
Where the yellow metal saw a strong rally in the final few days of 2023, amid growing optimism that the Fed could start cutting rates as early as March 2024.
But gold was hit with profit-taking at the start of the new year, with expectations of early rate cuts being trimmed from the central bank, especially after minutes of the last meeting by the federal, which gave little indication of when the bank would begin cutting rates this year.
The central bank acknowledged its progress towards lowering inflation by raising interest rates over the past year. But many policymakers still point to the need for tight monetary policy in the near term, to avoid rising inflation again.
Inflation remains above the Fed's annual target of 2%. The labor market is also relatively strong, with nonfarm payroll data due out Friday expected to provide more signals on that front.
We conclude the week with two important reports.
The first is the US NFP report where the market will be eager to see how well the US labor market is doing. The second indicator is the U.S. Purchasing Managers' Index of Services (ISM), which will give us a quick overview of the state of the services sector, which accounts for 80% of the U.S. economy.
Strong data is likely to throw its weight on gold, while weak numbers would give it a boost higher.
