• Gold price climbs to $2,190 as the US Dollar drops with eyes on US core PCE inflation data.
• The Fed remains confident that inflation is broadly easing despite recent hot readings.
• The US yields fall as expectations for the Fed lowering interest rates from June rebound.

Gold price (XAU/USD) jumps above a two-day high near $2,190 in Tuesday’s European session as the US Dollar corrects. The US Dollar faces downward pressure as Federal Reserve (Fed) policymakers seem to be growing confident about easing price pressures, foreseeing three interest-rate cuts this year despite hot inflation readings in January and February.

Investors look for fresh cues about the inflation outlook to know when the Federal Reserve will start reducing interest rates. The market participants will keenly focus on the United States core Personal Consumption Expenditure price index (PCE) data for February, which will be published on Friday. 

Evidence of easing price pressures could strengthen Gold prices as it will diminish hopes for the Fed to keep interest rates higher for a longer period. However, stubborn inflation data will negatively impact the Gold price as it will increase the opportunity cost of investing in it. Instead, investors could opt for interest-bearing assets such as bonds, whose appeal would increase due to higher yields. At the press time, 10-year US Treasury yields drop to 4.24% on firm expectations that the Fed will start reducing interest rates from June.