Gold prices have been trading within a tight range following last week’s decline as investors adopt a cautious approach.
The market could react to further guidance on U.S. monetary policy, with attention focused on this week’s key economic data and comments from Federal Reserve officials.
Notably, the upcoming Nonfarm Payrolls report and a speech from Fed Chair Jerome Powell could provide insights into the future trajectory of U.S. interest rates, potentially sparking volatility in gold prices.
On Monday, Fed Governor Christopher Waller voiced support for an additional rate cut this month, boosting expectations for a 25-basis-point reduction in the upcoming FOMC meeting, with markets pricing in around a 75% probability.
Anticipation of the Fed’s rate cut, combined with the bearish seasonal tendency of the dollar in December as investors rebalance their portfolios, also prompted the dollar to retreat from recent highs, providing support for gold prices. Additionally, persistent geopolitical tensions have reinforced gold’s stability.
However, the market is also factoring in potential Fed policy shifts and higher tariffs under the Trump administration, which could prompt the Fed to keep interest rates elevated for longer. These factors and the current market environment could create an uncertain outlook for gold prices.
