Gold price forecast: XAU/USD consolidates near $1,990 as risk appetite improves

The gold price has risen as cooling US data suggests the Fed may end its policy tightening.

The US dollar is under pressure following the announcement of disappointing Nonfarm Payrolls data on Friday.

A rise in risk appetite may impede the advance of precious metal demand.

The gold price is hovering at $1,990 per troy ounce during the Asian session on Monday, unable to extend its winning streak. However, bullion prices rose on predictions that the United States (US) Federal Reserve (Fed) may end its monetary policy tightening after disappointing employment data.

However, gold prices may fall as a result of increased risk appetite, as investors may abandon the precious metal in favor of more risky assets, fueled by the idea that the US Fed would not attempt an interest rate hike at its December meeting.

The US Dollar Index (DXY) fell more than 1.0% on Friday, impacted by low US Treasury yields following poor US unemployment statistics. The 10-year US bond yield is currently at 4.58%, bringing some comfort to the yellow metal's prices.

On Friday, the US Bureau of Labor Statistics released the October Non-Farm Payrolls (NFP) data, which showed a count of 150K. This fell short of the predicted 180K and was a significant dip from September's 297K. The month-on-month change in Average Hourly Earnings fell to 0.2%, falling short of the 0.3% forecast.

Furthermore, the US unemployment rate increased to 3.9%, contrary to the market's assumption of 3.8% in October. The ISM Services Purchasing Managers' Index (PMI) fell from 53.6 to 51.8. The US Department of Labor announced the initial claims for unemployment benefits for the week ending October 27 on Thursday, revealing a rise from 212,000 to 217,000.

Gold was in high demand as a safe haven during the Israel-Hamas conflict. Traders may modify their stance, anticipating a lower risk premium as concerns about the crisis spreading across the Middle East subside. For further market insights, the changing scenario and efforts by several governments to broker a ceasefire will be actively observed.