The price of gold rose by 0.3%, helped by the weakening of the US currency, as well as increased expectations of easing the Fed's monetary policy at the June meeting.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.07% to 104.36.
Last week, gold prices reached an all-time high as the US Central Bank signaled that it still forecasts three interest rate cuts by the end of this year, despite recent high inflation figures. According to the CME FedWatch Tool, markets see an 8.8% probability of a 25 basis point rate cut at the Fed meeting in May, and a 74.6% probability of a rate cut in June (compared to 54.7% a week earlier), with about 80 basis points of cuts priced in for this year - much lower than the 160 or so that had been priced in at the start of the year.
Market participants are also preparing for the publication of important inflation data (on Friday), which may affect the timing of the Fed's monetary policy easing. According to official data, real consumer spending decreased by 0.1% in January, which was confirmed by a 1.1% decrease in retail sales for the month. As for income, real personal disposable income remained at the same level. The disappointing result was partly due to strong price increases. The core PCE price index rose 0.4% in January, the largest increase in a year. Personal income is expected to have increased by 0.4% in nominal terms in February, while personal spending rose by 0.5%. In an absolute sense, these are strong results, but given expectations that the core PCE price index grew by 0.3%, the inflation-adjusted results are likely to correspond to a more moderate pace of consumer spending growth than in recent years. In general, spending cuts at the beginning of the year forced experts to revise downwards the forecast for real personal consumption expenditures in the first quarter to +2.4% from +2.9% earlier.