Gold prices rose by 0.4%, which was facilitated by the negative dynamics of the US currency. Investors are also preparing for the publication of a lot of US data that may affect the Fed's next steps.
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 0.18% to 103.14.
Last week, Fed policymakers said more data on inflation was needed before any decision could be made on cutting interest rates. According to the CME FedWatch Tool, markets see a 42.4% probability of a 25 basis point rate cut at the Fed meeting in March and a 84.5% probability of a rate cut in May. Overall, traders are now forecasting five rate cuts in 2024, compared with six cuts expected two weeks ago.
Experts warn that If central banks continue to counter the prevailing narrative that rate cuts will occur sooner rather than later, this could pressure the gold price.
As for the US data, preliminary PMI data for January, the fourth quarter GDP report, and personal income and spending statistics for December will be published later this week.