Gold rose on Monday from its lowest level in five weeks to trade around $1182 an ounce, as mixed U.S. economic data sparked speculations the Federal Reserve may postpone its rate hike to September.
While many analysts predict the Fed to raise interest rates in June, the recent data provided evidence recovery is uneven.
For instance, the infamous non-farm payrolls rose by just 126,000 last month, marking its weakest since late 2013.
Although the U.S. dollar posted its second weekly decline last week, gold was unable to gain demand as an alternative investment.
Investors will keep their eyes on the Fed’s two-day policy meeting starting on Tuesday to get guidance regarding the timing of a U.S. rate hike.
The meeting may not give clear guidance to the timing of the hike, but comments from Fed Chair Janet Yellen is likely to weigh on bullion prices.
The outlook for the shiny metal remains weak despite the release of some lackluster U.S. data and ease in the dollar, as investors know the Fed will eventually raise the borrowing cost whether in June or September. This means that gold will face a downside pressure, as the rate hike signals the end of the era of near-zero interest rates.
Still, traders prefer to put their money on stocks where Nasdaq led the rally in Wall Street in the week ended April 24, following the release of upbeat earning results by giant companies including Amazon, Microsoft and Google.
The following weekly chart shows the weakness in gold trend, as prices have continued to form lower highs since hitting a peak of $1433.45 in August 2013.
Bullion prices are currently trading lower SMA 50 and SMA 100, while the RSI 14 momentum indicator shows that gold is moving below the 50-center line.