Market Analysis

Gold prices rebounded on Monday, recovering from a recent two-week low amid diminishing expectations of U.S. interest rate cuts ahead of a crucial inflation report later in the week.

As of 0331 GMT, spot gold rose by 0.5% to $2,346.31 per ounce, up from its Friday low of $2,325.19 but down from the record high of $2,449.89 seen earlier last week. U.S. gold futures also climbed 0.6% to $2,347.60.

City Index senior analyst Matt Simpson suggested that while gold could see a modest uptick from current levels, there might be a retest of the $2,280-$2,300 range, particularly if U.S. economic data continues to outperform expectations.

The upcoming core personal consumption expenditures price index (PCE), a key inflation gauge for the Federal Reserve, is scheduled for release on Friday. Gold is traditionally viewed as a hedge against inflation, but higher interest rates could increase the opportunity cost of holding the non-yielding metal.

Commenting on market sentiment, Simpson noted that recent developments, including the Fed's stance on maintaining higher rates for a longer period, have tempered bullish expectations in the market. Traders are increasingly skeptical about the likelihood of multiple rate cuts in 2024, with current market pricing indicating about a 63% chance of a rate cut by November, according to the CME FedWatch Tool.

In other precious metals, spot silver rose 1.6% to $30.81, platinum gained 1.3% to $1,039.20, and palladium increased 1.7% to $980.00.

Paraphrasing text from "Reuters" all rights reserved by the original author.