Gold holds recent gains as focus shifts to US Inflation data

Gold price clings to all-time highs and awaits US Inflation data for further action. The US CPI data will indicate whether the Fed gets confident that price stability is ensured. The US NFP report keeps hopes of a Fed rate cut in June alive.

Gold price (XAU/USD) rally hit a pause in Monday’s early New York session as investors await the United States Consumer Price Index (CPI) data for February, which will be published on Tuesday. The precious metal takes a breather as the inflation data will provide cues about the US interest rate outlook.

The Gold price remains near all-time highs as yields on interest-bearing government bonds were hit hard after the Nonfarm Payrolls (NFP) report indicated that the labor market conditions are cooling. The 10-year US Treasury yields drop to 4.07%. The US Dollar Index (DXY) also exhibits a subdued performance, trading at around 102.73. On Friday, the USD Index recovered after printing a fresh seven-week low near 102.35.

The near-term outlook for Gold remains bullish. The NFP report for February, released on Friday, and last week’s Federal Reserve (Fed) Chair Jerome Powell’s Congressional testimony kept hopes alive for the central bank reducing interest rates in the June policy meeting.

Fed Powell said the central bank is not far from gaining confidence that inflation will return to the 2% target. He recognized the need to dial back the restrictive monetary policy stance to avoid the economy falling into a recession.