Gold Price Forecast: Eyes on the US dollar and Fed sentiment

Gold bulls stay in control besides the strength in the US dollar.

Fed sentiment, US CPI, oil and Russia all in play.

XAU/USD indecisive as investors assess central banks' rate outlook

The greenback is consolidating Friday's moves from when it advanced from two-week lows after the Nonfarm Payrolls data showed the world's largest economy had created far more jobs than expected. Payrolls grew 467,000 jobs last month and data for December was revised higher to show 510,000 jobs created instead of the previously reported 199,000. Reuters had forecast 150,000 jobs added in January while estimates ranged from a decrease of 400,000 to a gain of 385,000 jobs.

''Labour market data out last week show a hot and tight job market, likely raising the odds of a 50bps hike in March. US Treasuries sold off on the robust January job report,'' analysts at ANZ Bank commented on Monday about the Nonfarm Payrolls outcome, adding:

''January Consumer Price Index data this week are expected to show headline and core inflation remain elevated. Any sizable upward surprise would add to the case for the Fed starting off more aggressively.''

Meanwhile, with regards to rates, analysts at TD Securities explained that investors are now pricing in nearly 5.5 hikes in 2022 and nearly 50% odds of a March 50bp hike. ''The CPI report next week will be key as further strength will likely exacerbate pricing for faster hikes. This should push 10y real rates higher and is likely to keep 2y TIPS BEs elevated (particularly amid the surge in oil prices).''

As for oil prices, this could be a key theme in markets this week. On a monthly basis, WTI is quite literally off the charts: