According to Kitco - The US Federal Reserve (FED) has maintained a neutral stance since the beginning of the year, but some economists believe that weak economic data and concerns about recession could make the agency give a more loose view. Currently, the market is pricing in at least two interest rate cuts this year.
Ricardo Evangelista, senior analyst at ActivTrades, said: Donald Trumps drastic tariff policies are negatively affecting economic prospects, slowing growth and putting pressure on risky assets such as stocks, with key indicators erasing post-election gains.
According to this expert, weaker US inflation data expected to be released earlier this week is showing signs of slowing down in the world's largest economy, boosting expectations for the Fed's next interest rate cuts. As risk sentiment eases, gold could have more upside momentum.
"The FOMC meeting next week will play a key role in shaping expectations for the Fed's policy. This could become a major factor affecting gold prices, due to the precious metal's relationship with the US dollar, he added.
Meanwhile, Ernest Hoffman - market analyst of Kitco News said that investors are waiting for a series of important decisions from US central banks and economic data.
The first notable event is the Bank of Japan (BOJ) monetary policy meeting on Tuesday, followed by the US Federal Reserve (FED) interest rate decision on Wednesday. The Swiss National Bank (SNB) and the Bank of England (BOE) will announce interest rate policy on Thursday.
These moves could directly affect the strength of the US dollar and gold inflows. This expert believes that if the FED maintains a "hawl" stance and gives a cautious view on interest rate cuts, the USD could continue to strengthen, putting pressure on gold prices. Conversely, if the FED signals are more loose, the precious metal could maintain its upward momentum.
In addition to monetary policy, the gold market will also be affected by a series of US economic data, including Empire State retail sales and manufacturing index on Monday, housing start-up and construction permits on Tuesday, as well as unemployment claims, existing home sales and Philly Fed manufacturing index on Thursday.
These reports will provide further clues on the health of the US economy and impact the Fed's policy expectations.
In addition, central bank buying remains high, with notable increases in gold reserves from Poland, Turkey and China. Analysts say that every time gold prices are adjusted down, buying from large organizations will quickly help the market recover.
With unpredictable fluctuations in global financial and political markets, investors will need to closely monitor important developments next week. Although the long-term trend is still leaning up, gold may face technical adjustments before setting higher price levels.
Strong capital flow into gold ETFs
Analysts note that gold ETFs are starting to record significant inflows, pushing gold higher.
Golds historic role as a safe haven asset makes it a priority choice amid prolonged geopolitical tensions and economic uncertainty. The flow of capital into gold funds is largely driven by concerns about global trade disruptions due to escalating tariff disputes, as well as ongoing conflicts.
Investment demand from institutions, including ETF cash flow and record central bank purchases, has significantly supported gold's rally. Gold breaking above $3,000 an ounce could pave the way for $3,200 an ounce, said Neils Christensen, an analyst at Kitco News.
