Gold is moving in a horizontal price channel following two weeks of decline of more than 3.5%. Gold prices dropped from $2390 to current levels around $2300, now showing signs of stabilizing since the start of May between the resistance zone around $2330 and support at $2280.

Positive moves in the dollar index, supported by a slowdown in U.S. jobs, are considered the most important factors currently affecting gold prices, especially after the precious metal rose to record levels around $2430 in April 2024.

The markets are currently awaiting US inflation data that will be released next week in order to anticipate the Fed’s future monetary policy moves. A reading higher than 3.7% indicates the return of inflationary pressures, something which may encourage the Fed to raise the pace of interest rates.

Meanwhile, a reading below 3% may lead the Fed towards its first interest rate cut. Judging between inflation expectations on the one hand and gold’s horizontal price movements on the other, we will continue to monitor how gold prices move in the near-future.

Figure 1: XAUUSD, MT5