Gold (XAUUSD) Price Forecast: Gold Slips as Yields Rebound and Traders Book Profits

Gold Prices Ease After Friday Surge as Traders Eye CPI and Fed Policy Clues

Gold prices are trading slightly lower on Monday, giving back part of last week’s sharp rally that followed weak U.S. payrolls data. Friday’s upside move was driven by a steep drop in Treasury yields, which briefly pushed gold above key technical levels. However, lack of follow-through buying and profit-taking are keeping the market subdued at the start of the week.

Fed Rate Cut Expectations Rise After Weak Jobs Data

Last week’s disappointing U.S. nonfarm payrolls report showed just 73,000 jobs added in July, while June’s figure was revised down sharply to 14,000. This deep miss strengthened market expectations for a Federal Reserve rate cut in September.

CME FedWatch now shows a 78% probability of a cut. The lower rate outlook boosted gold on Friday, but that rally is now facing headwinds as Treasury yields and risk sentiment rebound.

The benchmark 10-year Treasury yield, which had dropped to a five-week low on Friday, is ticking higher again, weighing on non-yielding assets like gold. The rebound in yields and equities reflects a broad “buy-the-dip” sentiment in markets, tempering immediate demand for safe havens.

Technical Levels Hold, but Range-Bound Action Likely

Despite today’s modest retreat, gold is holding above two key support levels: the 50-day moving average at $3342.90 and a short-term pivot at $3353.58. As long as price remains above these levels, downside pressure may remain limited. However, traders should expect potential two-way action ahead of next Tuesday’s U.S. CPI report, which could provide the next decisive catalyst for gold prices.

Ole Hansen of Saxo Bank noted that while gold is struggling to break decisively higher, concerns over stagflation and further Fed easing are keeping sellers cautious. A confirmed break above $3430 could trigger momentum buying, he added. However, the daily swing chart suggests the key trigger level is $3452.

Gold Prices Forecast: Bulls Need CPI Spark, but Citi Sees $3,500 Ahead

While short-term price action may stay range-bound, medium-term sentiment is turning increasingly bullish. Citi raised its three-month gold price forecast from $3,300 to $3,500 per ounce, citing a deteriorating U.S. growth outlook and persistent inflation pressures.

With rising expectations for Fed rate cuts, a potential CPI-driven breakout, and strong technical support levels holding, the gold market retains a bullish undertone. However, traders should prepare for volatility and whipsaws until fresh economic data drives conviction.

More Information in our Economic Calendar.