The price of gold increased by 0.4%, which was facilitated by a decrease in US bond yields. Market participants also expect the release of a lot of US data that will help clarify the prospects for easing the Fed's monetary policy.
Experts said that gold needs new catalysts to return to a record high, and if US data indicate economic weakness, this will increase the likelihood of a 0.5% Fed rate cut in September, which will give gold a boost.
Market focus is on Friday's U.S. August non-farm payrolls report. ISM surveys, JOLTS job openings and ADP employment reports are also on investors' radar. According to the CME FedWatch Tool, markets see a 31% probability of a 0.5% rate cut in September and a 69% probability of a 0.25% rate cut, with a 1% rate cut expected by the end of the year. Bullion, a non-yielding asset, is more appealing in a low interest rate environment.
In addition, Goldman Sachs economists said that gold remains the preferred hedge against geopolitical and financial risks. They added that additional support for the precious metal is provided by expectations of a Fed rate cut and ongoing emerging market central bank buying.