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Gold Price Forecast: Traders Eyeing US Inflation Data, Debt Ceiling Stalemate
US inflation figures will affect the Fed's monetary policy and the price of gold; Yellen's warning regarding the debt limit has increased demand for gold as a safe-haven asset.
Overview of Gold
As investors expected U.S. inflation statistics that would affect the Federal Reserve's monetary policy stance, gold (XAU) prices declined on Monday.
Gold was trading at $2021.30 at 03:20 GMT, down 1.4% from the previous close. The SPDR Gold Shares ETF finished Friday at $187.46, down 1.56 percent. Stronger-than-anticipated U.S. payrolls statistics reduced expectations of interest rate reduction from the Fed, which contributed to the decline in gold prices.
Data Showing Weak Inflation May Boost Gold
Important economic statistics, such as the consumer price index (CPI), producer pricing index (PPI), and consumer confidence, will be made public this week in the United States. The Fed may predict lower interest rates if these data indicate moderate inflation, which would be good for gold prices. Traders also monitor changes in the U.S. banking industry and the debt limit.
Yellen's Warn increase interest on gold.
People often buy in gold (XAU), a well-liked safe-haven asset, when the economy is uncertain and interest rates are low. U.S. Treasury Secretary Janet Yellen has cautioned that Congress needs to raise the debt limit.
She emphasized that failure to comply by early June may result in a "constitutional crisis" and damage the creditworthiness of the federal government. The possible effects on the financial market are also a source of worry. Gold would certainly gain if the U.S. government runs out of money to pay its obligations, and its price may rise to $2,100.
Increasing Gold Reserves in China
At the end of April, China owned 66.76 million fine troy ounces of gold, up from 66.50 million ounces at the end of March.
China's gold reserves increased in value from end-March to end-April, going from $131.65 billion to $132.35 billion.
Outlook for Gold (XAU) Uncertain Despite Economic Data
As investors await important US economic data, such as the CPI, PPI, and consumer confidence surveys, the near-term prognosis for gold (XAU) is still murky. A low inflation rate might be good news for gold prices since the Fed is expected to cut interest rates.
The U.S. Treasury Secretary Janet Yellen's warning on the debt limit may also have an impact on gold prices, as seen by the decline in gold prices on Monday. Gold is expected to gain in the case of a U.S. government cash shortage, perhaps driving prices as high as $2,100.
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