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Gold prices fluctuate due to rising bond yields and ongoing economic uncertainty. But this week, the release of US inflation data will affect the metal's movement, especially since the non-farm employment report provided markets with a mixed picture. The figure fell short of expectations, coming out at 187,000 instead of the forecasted 187,000. Wages, meanwhile, increased by 0.4%.
For gold to rise above 1980, the June consumer price index must also be below expectations.
If prices do not rise even in this case, then it means that gold lost its liquidity. However, this does not prove that inflation will decline, as the US economy faces a new surge in food and energy prices.
Most likely, the inflation data will confirm the Fed's view that interest rates will have to remain high for a longer period, which will create harsh conditions for gold. But selling the metal will not be a good option, as the yield on 10-year US bonds may peak above 4%.
If the inflation data turns out weaker than expected, it may not be enough to change the hawkish stance of the Federal Reserve, as well as the debt rating downgrade by Fitch Ratings.
Even so, the level of 1950 remains important, as every time the price bounces off this level, the rally does not last long.
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