Gold Price Forecast: XAU/USD holds below $2,300, Fedspeak eyed

■Gold price trades on a softer note near $2,295 on Monday.

■The Nonfarm Payrolls arrived at 175K in April vs. 315K rise prior, weaker than expected.

■Fed’s Bowman said she remains willing to raise rates further if data shows inflation progress has stalled or reversed.

Gold price (XAU/USD) loses its recovery momentum around $2,295 on Monday during the early Asian session. Investors will keep an eye on Fedspeaks this week, along with the first reading of the US Michigan Consumer Sentiment Index for May on Friday. Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD against a weighted basket of currencies used by US trade partners, edges higher to 105.12, bouncing off nearly one-month lows.

The US Employment data on Friday showed some signs that the US economy is slowing. The Nonfarm Payrolls (NFP) came in at 175K in April from 315K rise (revised from 303K) in March, weaker than 243K expected. This figure registered the smallest gain since October 2023. Additionally, the Unemployment Rate ticked up to 3.9% and Average Hourly Earnings declined by 3.9% YoY in April. Finally, the ISM Services PMI fell into contractionary territory, arriving at 49.4 in April from 51.4 in March, below the market consensus of 52.0.
 
After the data release, the probability of the Federal Reserve (Fed) rate cut increased, with traders expecting 38 basis points (bps) of rate cuts toward the end of the year. The precious metal climbed to $2,320 due to the downbeat US economic data but erased its earlier gains after the hawkish remarks from the Fed.

Fed Governor Michelle Bowman was hawkish in a recent interview, saying that she’s willing to hike rates if inflation stalls or reverses. Meanwhile, Chicago Fed President Austan Goolsbee stated that the latest US employment report was solid, emphasizing that current monetary policy is restrictive. These comments from Fed officials, along with the risk-on mood, diminish the appeal of non-yielding metals.