Gold at new all-time highs on Fed rate cut hopes

• The price of Gold corrects slightly after registering a new all-time high at $2,265, before a week full of data in the United States.
• Jerome Powell considers that the pace of decline in February PCE core inflation is in line with the rate required by the Fed.
• Investors await the release of the US ISM Manufacturing PMI to know the next move of the US Dollar.

The price of Gold (XAU/USD) shows strength near new all-time highs around $2,260 ahead of a busy week on the US economic calendar. The precious metal is clinging to gains as expectations rise that the Federal Reserve (Fed) will lean towards its June meeting to cut interest rates. Fed Chair Jerome Powell validated the decline in core personal consumption expenditure (PCE) inflation data for February, as the Fed looks for evidence that price pressures are easing toward the target 2%.

Increased expectations that the Fed will cut rates, especially after a two-year period of rate hikes, are denting yields on interest-bearing assets such as U.S. bonds. However, this increases the investment value of Gold. The US 10-year Treasury yield rose slightly in the European session on Monday, but has fallen to 4.20%.

The US Dollar Index (DXY), which tracks the value of the US dollar against six major currencies, is consolidating around 104.50. The US dollar's rise remains limited by firm Fed rate cut expectations, while uncertainty ahead of the release of the US Non-Farm Payrolls (NFP) report and related jobs data is limiting the decline.

Daily Market Moves Summary: Gold Price Strengthens on Strong Fed Rate Cut Prospects

• The price of Gold turns sideways after refreshing an all-time high near $2,260. Demand for the precious metal remains on the rise amid expectations that the Federal Reserve will begin its rate cut cycle in June.
• Fed Chair Jerome Powell said Friday that the latest U.S. inflation data was “in line with what we would like to see,” while being interviewed on radio's “Marketplace” show. public, which boosted rate cut expectations for June. According to CME's FedWatch tool, traders see a 68% chance of rate cuts being announced in June. Expectations have risen from the 60% seen prior to the release of February Core PCE Price Index data on Friday.
• Although Frd's Powell remains confident in progress in easing inflation, he acknowledged that the central bank does not need to rush to cut rates with the economy on solid footing. He acknowledged the need to see more progress on inflation before cutting interest rates and warned of the need to be cautious on rate cuts, citing strong economic and labor market conditions.
• Core monthly and annual PCE inflation grew by 0.3% and 2.8% in February, as expected. However, January estimates were revised upwards to 0.5% monthly and 2.9% annually, up from previously estimated increases of 0.4% and 2.8%, respectively.
• The Fed's preferred measure of inflation is at its lowest level in almost two years, supporting expectations of a Fed rate cut in June.
• This week, the US March NFP report, due on Friday, is the main event to watch, as it will likely clarify when the Fed might start cutting interest rates.
• In Monday's session, market participants will focus on the March US Manufacturing PMI, which will be released at 14:00 GMT. The factory data is estimated to increase to 48.4 from 47.8 in February, falling below 50.0 for the 16th consecutive month. A figure below the 50.0 threshold suggests that business activity in the US manufacturing sector contracted in this period.

Technical analysis: Gold updates all-time highs at $2,265

The price of Gold updates historical highs at $2,265. The precious metal strengthened after breaking above the previous all-time high of $2,223, printed on March 21. The price of Gold may continue to rise as it trades in uncharted territory. All short-term to long-term exponential moving averages (EMAs) are sloping upwards, suggesting strong short-term demand.

The 14-period Relative Strength Index (RSI) reaches 78.00, indicating strong bullish momentum, but it is already in overbought territory. There are no divergence signals and an overbought signal cannot be ruled out.