Gold prices rose significantly, setting a new record high at $2,453.80 per ounce. The recent rally of the precious metal was caused by increased expectations of easing of the Fed's monetary policy against the background of weaker-than-expected US CPI data.
The negative dynamics of the US currency also supported gold prices. The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.05% to 104.40, which is not far from the 5-week low reached on Thursday (104.08).
Favorable consumer inflation data for April, released last week, reinforced hopes that the Fed will be able to start lowering interest rates this year. However, the subsequent series of hawkish comments from a number of Fed representatives, including statements by the President of the Federal Reserve Bank of Cleveland, Loretta Mester, the President of the Federal Reserve Bank of New York, John Williams, and the president of the Federal Reserve Bank of Richmond, Thomas Barkin, that it may take longer to reduce inflation to the 2% target, prompting the market to make minor adjustments to bets on US monetary policy easing. Minutes of the Fed's last policy meeting due on Wednesday along with comments from a slew of Fed speakers will be on investors' radar for this week. According to the CME FedWatch Tool, markets see a 9.1% probability of a 25 basis point rate cut at the Fed meeting in June, a 27.9% probability of a rate cut in July, and a 65.4% probability of monetary policy easing in September.
As for the demand for gold, expectations of continued high demand in China intensified after the country announced additional efforts to stabilize its crisis-hit real estate sector.