Gold prices fell on Monday amid aggressive Fed views and a bullish risk tone.
The gold market (XAUUSD) saw substantial supply during the Asian session on Monday. Wiping off a significant portion of its modest gains over the previous two days. The US Personal Consumption Expenditures (PCE) Price Index, issued on Friday. Reiterated views that the Federal Reserve (Fed) will maintain interest rates higher for longer. Which is expected to drive flows away from the non yielding yellow metal. Aside from this, The largely optimistic tone in the equities markets adds to the offered tone surrounding the safe haven commodity. While the downside appears limited.
A minor USD decline helps to minimize the downside amid ongoing international concerns.
The US Dollar (USD) fails to build on Friday’s modest recovery from a two week low and begins the new week on a lower note. Providing some support for the Gold price. Furthermore, the Israel-Hamas confrontation in the Gaza Strip has shown no indications of easing. This, together with the extended Russia-Ukraine war. Keeps geopolitical uncertainties at play and may continue to act as a tailwind for the XAUUSD. Traders may also prefer to wait for the outcome of the critical two day FOMC meeting on Wednesday. And key US macroeconomic releases, such as the Nonfarm Payrolls (NFP) report on Friday.
Daily Market Movers: Gold price is hampered by a mix of reasons, but lacks follow-through selling.
The US Bureau of Economic Analysis said on Friday that the Personal Consumption Expenditures (PCE) Price Index increased 0.3% in March. Raising the yearly rate to 2.7% from 2.5% in February, exceeding expectations of 2.6%.
Meanwhile, the core PCE Price Index, which excludes volatile food and energy costs, remained stable at 2.8%. Versus 2.6% expected, reinforcing hawkish Federal Reserve predictions and putting pressure on the non yielding gold price.
Furthermore, Israel Hamas peace negotiations in Cairo feed optimism about the de escalation of tensions in the Middle East. Which increases investors’ desire for riskier assets and adds to driving flows away from the safe-haven gold. metal.
However, Ukraine bombed more Russian oil refineries over the weekend. And requested additional military aid from the US due to deteriorating conditions on the front lines. Hence maintaining geopolitical concerns and supporting the XAUUSD.
Traders appear cautious ahead of the FOMC meeting and major US economic data this week.
US inflation is not lowering as expected should provide a tailwind for the metal. Which is viewed as an inflation hedge, ahead of the critical two-day FOMC monetary policy meeting beginning on Tuesday.
This week, investors will also face the release of significant US macroeconomic data at the start of a new month, including the carefully anticipated monthly jobs data, commonly known as the Nonfarm Payrolls (NFP) report, on Friday.
