• Gold futures were little changed to end the shortened trading week due to the US holiday, as financial markets seemingly ignored the latest US inflation report.
• The yellow metal performed well over the past week and will post monthly gains.
• However, the near-term gold price trend may be stable in the coming sessions as labor data will be the main catalyst for this week.

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According to gold trading platforms, the price of gold has fallen to the threshold of the support level of $ 2,320 per ounce, and accordingly, gold prices are on track to achieve a weekly increase of 1.2% and will record an increase in May of about 2.3%. Since the beginning of the year until now, gold prices have risen by 14%.

In the same performance, silver prices, which is the sister commodity to gold, continued to decline towards $ 31 per ounce. Overall, the price of the white metal will enjoy weekly gains of about 3% and a monthly increase of more than 17%.

According to the economic calendar, all eyes were on the Federal Reserve's preferred inflation gauge, the personal consumption expenditures (PCE) price index. In April, the PCE price index rose 0.3% on a monthly basis and settled at 2.7%. Core PCE spending, which excludes volatile energy and food components, jumped at a slower-than-expected pace of 0.2% and held steady at 2.8%. The consensus was that PCE confirmed a pause in progress on inflation and that the latest leg in the inflation fight will be a slow grind. As a result, the Federal Reserve could keep interest rates higher for longer.

In other economic data on Friday, US personal income rose 0.3% last month and personal spending rose less than expected by 0.2%.

The Chicago Business Barometer, also known as the Chicago PMI, collapsed to its lowest level since the second quarter of 2022, indicating that economic activity in the city has come to a screeching halt.

Among the factors influencing the gold market, the US Treasury bond market was mostly red across the board, with the 10-year yield falling below 4.5%. Furthermore, the 2-year yield fell 5.2 basis points to 4.877%, while the 30-year yield fell 5.2 basis points to 4.633%.

Another influencing factor, The US dollar index (DXY), a measure of the dollar against a basket of major currencies, fell to 104.42 from its opening at 104.72. Generally, a weaker dollar is bullish for dollar-denominated commodities as it makes them cheaper for foreign investors to buy. Overall, the odds of Fed easing increased slightly in September, November, and December. Meanwhile, the European Central Bank is expected to cut interest rates this week for the first time since 2016 but doubts about further moves beyond June increased after hotter-than-expected inflation. The Bank of Canada could also cut borrowing costs next week.

Looking at May, bullion prices rose 1.8%, the fourth straight monthly gain.

According to licensed forex brokerage platforms, the US dollar index extended its mid-session decline to the 104.2 mark on Friday after a slew of data pointed to an economic backdrop that may favor a less restrictive monetary policy by the Federal Reserve. Also, Core personal consumption expenditures, the Fed’s preferred measure of underlying inflation, rose 0.2%, the slowest pace so far this year, adding to hopes that inflation may be getting closer to its target.

In addition, personal spending and income grew at a slower pace. Markets continue to show uncertainty over whether the Fed will raise interest rates for the first time at its September meeting, while it generally favors one cut this year. The dollar fell the most against the Australian and New Zealand dollars. Earlier in the session, the dollar had already fallen against the euro after higher-than-expected inflation readings in the euro zone, prompting investors to speculate that the European Central Bank may implement smaller interest rate cuts this year.
 

Gold Price Forecast and Analysis Today:

The price of gold may remain under downward pressure until the markets react to the central banks' announcements of interest rate cuts this week, in addition to the reaction to the announcement of U.S. employment figures. Overall, we still prefer buying gold at every dip, as global geopolitical tensions and further central bank purchases will support the buying strategy. Currently, the nearest support levels for gold are $2310, $2275, and $2255 per ounce, respectively.

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