The price of gold rose by about 0.6%, while market participants are preparing for the release of US data, which may affect further actions by the Fed.
Gold is also supported by the negative dynamics of the US currency - the US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies, fell by 0.14% to 104.87.
As for the data, reports on CPI and retail sales will be published at 12:30 GMT. Traders will watch for signs that inflation has resumed its downward trend towards the Fed's 2% target rate. CPI is projected to rise in April by 0.3% m/m after an increase of 0.4% in March. Meanwhile, core inflation - excluding food and energy - probably rose by 0.3% over the month and 3.6% per annum, which is a three-year low. So crucial is the data that rounding to the second decimal place could make all the difference. A low number would likely boost bets the Fed could ease as soon as July. Equally, a high inflation print could push a rate cut out past September. Last week's lackluster jobs report and a softer-than-expected U.S. payrolls report for April have increased expectations for rate reductions by September. However, yesterday's data showed that producer prices rose more than expected in April. Markets are pricing in around a 65.1% chance of a rate cut by the Fed's September meeting, with about 45 basis points of cuts in total expected in 2024, according to the CME FedWatch Tool. Lower interest rates reduce the opportunity cost of holding gold.