Gold price rises sharply to $2,040 as the US Dollar falls onto the backfoot.
The precious metal climbs to almost a three-week high even though investors remain uncertain about rate cuts by the Federal Reserve (Fed).
All Fed policymakers have argued against premature rate cuts as they could flare up price pressures again.
Also, policymakers still gather evidence to confirm that inflation will decline sustainably to the 2% target.
On Monday, Kansas City Federal Reserve Bank President Jeffrey Schmid said a tight labor market, considerable momentum in households’ demand, and inflation above 2% leave no room for an aggressive adjustment in the monetary policy stance.
As per the viewpoint of Jeffrey Schmid, the Fed needs to be patient and observe how the economy responds to policy tightening. The rate cuts could be announced only after gaining confidence that a victory can be announced against sticky inflation.
This week, the array of the United States economic data will direct further action in the Gold price.
US Durable Goods Orders, second estimates for Q4 Gross Domestic Product (GDP), and core PCE price index data are lined up for release.
The US Durable Goods Orders for January are anticipated to have contracted sharply by 4.5% against a stagnant performance in December. Weak demand for Durable Goods indicates a soft outlook for core inflation.
Investors will majorly focus on the core PCE price index, which could meaningfully influence the expectations for rate cuts by the Fed.
The expectations from investors show that the core PCE price index data rose by 0.4% on a month-on-month basis against a 0.2% increase in December. In the same period, the annual inflation data is expected to have decelerated to 2.8% from 2.9%.
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