Gold Price Forecast: XAU/USD remains steady around $1,930, focus on US data

  • The gold price maintains its position around $1,930 ahead of US economic data.
  • The Fed’s hawkish stance on the interest rate trajectory bolsters the US Dollar (USD).
  • Higher US bond yields are weakening non-yield-bearing assets like gold.

Gold prices hovered around $1,930 during the early trading hours of the European session on Thursday. Investors seem to have shifted their focus to upcoming US data after the US Federal Reserve’s (Fed) decision on policy rates.

However, the Fed’s hawkish stance on the interest rate trajectory exerts pressure on the price of the yellow metal.

As expected, the Federal Reserve opted to maintain the current benchmark policy rate at 5.5% during the meeting held on Wednesday.

Moreover, it is anticipated that the central bank will pursue an additional rate hike in 2023, in line with the Federal Open Market Committee’s (FOMC) projection of slightly higher inflation compared to its previous forecasts.

Hence, Federal Reserve officials unexpectedly revised their projected interest rates for 2024, increasing them from 4.6% to 5.1%. This adjustment played a significant role in supporting the US Dollar (USD).

The US Dollar Index (DXY), which measures the Greenback’s performance against six other major currencies, extends its gains and trades at a six-month high of around 105.50.

Additionally, higher US Treasury yields have contributed to the US Dollar’s strength and increased the opportunity cost of holding non-interest-bearing assets like gold. The yield on the 10-year US Treasury note has risen to 4.43%, the highest level since 2007.

Moreover, in a press conference held immediately after the rate decision on Wednesday, Federal Reserve Chair Jerome Powell reiterated the Fed’s commitment to achieving its long-term inflation target of 2%. Powell also suggested that the central bank is likely approaching the peak of its interest rate hike cycle, but he emphasized that future policy decisions would be based on data-driven analysis.

Investors will closely monitor the upcoming data releases from the United States (US) scheduled for Thursday. This data includes the weekly Initial Jobless Claims, the Philadelphia Fed Manufacturing Survey, and the change in Existing Home Sales.

These reports can provide valuable insights into the health of the US labor market, the manufacturing sector, and the real estate market, which are all important factors influencing economic sentiment.

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