Gold steadies after two-month high on Fed watch

Gold prices held onto recent gains on Monday morning, hovering near a two-month high reached last week, as investors awaited further clues from the Federal Reserve on the path of future interest rates.

Spot gold (XAU/USD) was trading at $2,084 by 07:30 GMT, consolidating after a surge driven by bets on potential U.S. interest rate cuts.

The yellow metal’s recent rally came on the back of softer U.S. economic data, which fueled speculation that the Fed could ease monetary policy as early as June.

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This week, markets are focused on a two-day testimony by Fed Chair Jerome Powell, hoping for insights into the future of interest rates. Analysts predict Powell will reiterate the Fed’s need for stronger signs of inflation returning to its 2% target, suggesting a continued hawkish stance.

Despite this, traders still expect a 25 basis point rate cut in June, according to the CME Fedwatch tool.

Following Powell’s testimony, all eyes will be on the key nonfarm payrolls data for February, scheduled for release on Friday. A cooling labor market is another crucial factor influencing the Fed’s interest rate decisions, as rising rates tend to make non-yielding assets like gold less attractive.