Gold Forecast: Gold Slips as Yields Rebound and Traders Book Profits

LONDON (August 4) 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.

Daily US Government Bonds 10-Year Yield

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.

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.

FXEmpire