Gold prices remain depressed for the third day in a row, falling to a more than one-week low.

The gold price (XAUUSD) fell for the third day in a row on Monday. Marking the fourth day of a negative trend in the previous five. And reached a one-week low. The precious metal continues its offered tone below the $2.1,50 mark through the early portion of the European session amid predictions. That the Federal Reserve (Fed) will defer interest rate reduction. In the aftermath of persistently high inflation in the United States. Meanwhile, the forecast remains supportive of higher US Treasury bond rates. Which are expected to act as a tailwind for the US Dollar (USD) and drive flows away from the non-yielding yellow metal.

Expectations that the Fed would maintain interest rates high for an extended period of time continue to weigh on the XAUUSD.

Markets continue to price in a higher probability that the Fed will begin its rate-cutting cycle in June. This prevents USD bulls from making aggressive wagers. Which, combined with geopolitical worries, offers some support to the safe haven gold market and helps limit additional losses. Traders also appear hesitant, preferring to wait for additional clues regarding the Fed’s rate cutting strategy before trading for the next leg of a directional move. Consequently, the focus will remain fixed to the outcome. The key two day FOMC monetary policy meeting, which is due to be announced on Wednesday, will influence USD price dynamics and provide a new push.

Daily Market Movers: Hawkish Fed predictions continue to weigh down on gold prices.

Data issued last week from the United States indicated some stickiness in inflation. Which may push the Federal Reserve to maintain interest rates elevated, dragging on the non-yielding gold price.
The University of Michigan’s preliminary survey indicated on Friday. That one year and five-year inflation predictions were little altered in March. While the US Consumer Sentiment Index fell to 76.5.
The CME Group’s FedWatch Tool, meanwhile, indicates that the chance of an interest rate drop at the June policy meeting remains at approximately 60% and prevents the USD bulls from putting new bets.

Geopolitical issues may help minimize losses ahead of the FOMC’s important policy decision on Wednesday.

Geopolitical risks remain elevated as a result of the extended Russia Ukraine war and Middle Eastern conflicts. Which are seen as adding further support to the considered safe haven precious metal.
Last week, Ukraine increased drone strikes on Russian oil refineries. While Israeli Prime Minister Benjamin Netanyahu confirmed that he will advance into Gaza’s Rafah pocket.
Traders might refrain from taking aggressive directional bets. And now look forward to the result of the highly anticipated FOMC monetary policy meeting on Wednesday for some meaningful stimulus.