In Tuesday’s early American session, the price of gold (XAU/USD) surged above a two-day high, reaching near $2,190, propelled by a correction in the US Dollar. The Greenback faced downward pressure as Federal Reserve (Fed) policymakers exhibited growing confidence in easing price pressures. Despite hot inflation readings in January and February, the Fed envisions three interest-rate cuts this year, contributing to the Dollar’s decline.
Market participants are closely monitoring fresh cues regarding the inflation outlook to gauge the timing of potential interest rate adjustments by the Federal Reserve. Attention is particularly focused on the release of the United States core Personal Consumption Expenditure price index (PCE) data for February, scheduled for publication on Friday.
The outcome of the PCE data will play a crucial role in shaping Gold prices. Evidence of easing price pressures could bolster Gold prices by diminishing hopes for the Fed to maintain higher interest rates for an extended period. Conversely, stubborn inflation data could exert downward pressure on Gold prices by increasing the opportunity cost of investing in the precious metal. Investors may opt for interest-bearing assets such as bonds, which would become more appealing due to higher yields.
As the market awaits further clarity on inflation trends and monetary policy decisions, the interplay between economic indicators, central bank actions, and investor sentiment will continue to influence the trajectory of Gold prices in the coming sessions.
