The price of gold fell 0.25% amid profit-taking after reaching a 2-week high. Further price declines were limited by ongoing tensions in the Middle East.
Meanwhile, the US dollar has consolidated against major currencies, while investors are preparing for the publication of US data that will help clarify the prospects for the Fed's monetary policy. Experts warned that if the US data continues to point to the strength of the economy, it may reduce the need to lower interest rates and put pressure on gold. Market participants' focus is now shifting to the Fed's preferred inflation indicator, personal consumption expenditure (PCE) data, which is due on Thursday. Investors postponed expectations of the Fed's first rate cut from May to June and sharply reduced the expected degree of rate cut by the US central bank. Fed officials had forecast three rate cuts of 25 basis points this year, while markets expected as many as seven. According to the CME FedWatch Tool, markets see a 20.8% probability of a 25 basis point rate cut at the Fed meeting in May, and a 66.1% probability of a rate cut in June, with approximately 80 basis points of cuts priced in for this year.