The price of gold rose by about 0.4%, retreating from the 2-week low reached on Friday amid a decrease in the likelihood of easing the Fed's monetary policy. Today's price recovery is caused by the weakening of the US currency and partial profit taking. Meanwhile, experts warn that market liquidity is likely to be low today due to national holidays in the US and the UK.
One of the key events of this week will be the publication of US inflation data (on Friday), which may cause a reassessment of the timing of the Fed's interest rate cut. Economists said that despite the shaky confidence, the household sector continues to show resilience. Consumer spending in March was higher than expected amid a slowdown in real disposable income growth. To make ends meet, the personal savings rate has fallen since the start of the year and is now at a historically low 3.2%. The increased cost of borrowing has slowed the pace of consumer credit growth, but the steady rise in credit card debt and the low savings rate suggest that consumers are doing everything they can to keep spending. After an increase of 0.8% in February and March, personal spending is expected to show a more modest increase in April (+0.3%). Retail sales did not change during the month, as Easter came earlier than usual, and some expenses had to be postponed to March. As for income, it is predicted that their growth has also slowed down - to 0.3% from 0.5% in March. Meanwhile, according to forecasts, the core PCE price index - the Fed's preferred inflation indicator - rose 0.3% after a similar increase in March. Experts warn that higher-than-expected figures may further reduce the likelihood of the Fed easing monetary policy this year. According to the CME FedWatch Tool, markets see a 10.2% probability of a 25 basis point rate cut at the Fed meeting in July, a 50.3% probability of a rate cut in September, and a 62.7% probability of monetary policy easing in November. Bullion is known as an inflation hedge, but higher rates increase the opportunity cost of holding non-yielding gold.