Gold prices surged last week, hitting a record high above $2,180 per ounce, driven by falling U.S. Treasury yields and a weakening U.S. dollar. Analysts attribute the surge to data showing a rise in the U.S. unemployment rate, increasing expectations of a Federal Reserve interest rate cut. Spot gold closed up 0.9% on Friday, ending the week with a 4.62% increase, the largest weekly gain since October last year.
Technical buyers showed interest in gold as prices climbed above $2,100 an ounce, with the U.S. dollar facing selling pressure. Federal Reserve Chairman Jerome Powell’s comments also fueled the rally, as he hinted at a possible rate cut in June. Chinese trade data showing a larger than expected surplus further supported gold prices.
This week, focus will shift to U.S. CPI data, with expectations of a 0.4% increase in CPI and a 0.3% increase in core CPI. The market is currently pricing in a near 80% chance of a rate cut in June. Investors will also be watching for February retail sales and industrial output data later in the week.
Despite gold’s overbought status, analysts believe that $2,200 per ounce may act as psychological resistance. Spot gold is currently trading around $2,177.65 per ounce, with uncertainty surrounding how the upcoming data releases will impact gold prices.