Daily Digest Market Movers: Gold price is undermined by hawkish Fed expectations and a modest USD strength
- Friday's release of the US Personal Consumption Expenditures (PCE) Price Index pointed to still sticky inflation and reaffirmed bets that the Federal Reserve will begin its rate-cutting cycle only in September.
- Hawkish Fed expectations act as a tailwind for the US Dollar, which, along with a generally positive risk tone, turn out to be key factors that contribute to capping the upside for the non-yielding Gold price.
- The global risk sentiment remains well supported on the back of receding fears about any further escalation of conflict between Iran and Israel and the latest optimism over Israel-Hamas peace talks in Cairo.
- Traders, however, now seem to have moved to the sidelines and refrain from positioning for a firm near-term direction ahead of this week's key central bank event risk and important US economic releases.
- The Fed is scheduled to announce its policy decision at the end of a two-day meeting on Wednesday, which will be followed by the release of the closely watched US jobs data, or the Nonfarm Payrolls report on Friday.
- Investors will look for cues about the Fed's future policy decisions and rate-cut path, which, in turn, should influence the USD price dynamics and help in determining the near-term trajectory for the XAU/USD.
- In the meantime, Tuesday's US economic docket – featuring the Chicago PMI and the Conference Board's Consumer Confidence Index – might provide some impetus later during the North American session.
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