Gold Prices Surge Ahead of Key US Data, All-Time High in Sight

Gold (XAU/USD) Analysis

• Gold prices surge ahead of key US economic data

• Golds upside breakout holds up despite overbought signals

• Key events/data in focus: US services PMI, Fed testimony, ECB, NFPs

Gold Prices Surge Ahead of Key US Economic Data

Gold continues to build on gains over the last two trading sessions where the precious metal rose just under 3.5%, or by $70. Gold prices are not far from the all-time high reached in December of last year and the recent uptick in volatility has some parts of the market expecting a retest of the significant marker.

There hasnt been a commensurate drop in US yields or indeed, the dollar, to warrant such a rise but there has been a lot of gold buying from central banks around the world and this could finally be filtering into the paper price of gold. In addition, markets are growing increasingly confident that the Fed will cut rates in June, which may be helping to fuel this rally to some degree.

Lower interest rates help to make the non-interest bearing metal more attractive and tends to result in higher gold prices. Of course, the safe haven attraction of gold should not be dismissed, as major conflicts in eastern Europe and the Middle East drag on. However, equity markets point to positive risk sentiment for the time being as major indices achieve all-time highs, effectively lessening the degree to which gold's safe haven appeal is assisting to prop up prices.