Key U.S. economic data in the coming week will influence gold price trends

A series of important U.S. economic data in the coming week will affect the trend of gold prices. (Bloomberg file photo)

[Financial Channel/Comprehensive Report] Gold rose slightly last Friday (25th), but closed in the black for the week. The price of gold is currently down about 19% from the intraday high on February 27th. Whether to wait and see or enter the market, experts pointed out that instead of rushing to guess the bottom, it is better to observe a series of important U.S. economic data in the coming week, because these numbers may directly affect the Fed's interest rate expectations, the U.S. dollar and U.S. bond yields, and then affect the price of gold.

According to foreign media reports, the important factors currently suppressing gold are the rise in U.S. bond yields and the market's re-evaluation of FED policies. Gold itself does not generate interest. When bond yields rise, the opportunity cost of holding gold will also increase, putting pressure on gold prices. The market's current expectations for interest rates in the next year have risen to about 4.77%, which is higher than 4.68% a week ago and much higher than 4.05% a month ago, indicating that investors' expectations for interest rate cuts are cooling down.

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But Wall Street hasn't completely turned bearish. In the latest Kitco survey, 5 of 14 analysts are bullish, 4 are bearish, and 5 expect consolidation; 57% of retail investors are bullish. This means that what the market is really waiting for may not be purely technical signals, but the next batch of economic data.

The most noteworthy one is the PCE price index in August. This is the Fed's preferred inflation indicator. If inflation data is lower than expected, the market may re-bet on lower interest rates in the future, supporting gold; conversely, if inflation remains stubborn, yields may rise again and pressure on gold prices may increase.

Employment data is also critical. Next week will be released JOLTS (counting non-farm vacancies, voluntary separations, hiring and layoffs) job vacancies, the ADP employment report and weekly initial unemployment claims, and finally the September non-farm payrolls report. If the job market shows that the economy is still strong, the market may believe that there is no need for the Federal Reserve to cut interest rates in a hurry; if employment significantly cools, it may rekindle expectations for an interest rate cut.

In addition, the final value of U.S. second-quarter GDP, September ISM manufacturing PMI and consumer confidence will also be released one after another. Together, these data will describe whether the U.S. economy has "stubborn inflation and a strong economy" or is beginning to show signs of cooling.

Technically, gold has now fallen below US$4,300 per ounce again. Market analysts believe that whether it can regain US$4,300 or even US$4,400 in the future is an important position to observe short-term strength; some analysts regard the vicinity of US$4,100 as a support area worthy of attention.

For investors, next week may be an important observation period for gold prices. PCE, employment, GDP, ISM and other data are about to be revealed one after another. Whether the gold price will retreat and consolidate before attacking again, or whether the yield rate will continue to rise leading to an expansion of the correction, is likely to be hidden in these numbers.

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