Gold rose slightly on Friday, and is preparing to record a second weekly increase in a row (+0.56%) amid increased expectations of easing the Fed's monetary policy, which caused a drop in the US dollar and US bond yields.
Data released this week showing signs of slowing inflation has brought relief to the Fed, but policymakers have not yet openly changed their minds about the timing of rate cuts. Bullion is known as an inflation hedge, but higher rates increase the opportunity costs of holding non-yielding gold. According to the CME FedWatch Tool, markets see a 8.7% probability of a 25 basis point rate cut at the Fed meeting in June, a 31.4% probability of a rate cut in July, and a 68.4% probability of monetary policy easing in September.
Meanwhile, experts have warned that gold prices could fall as markets seek to restore the historical relationship between gold and the US dollar. Overall, uncertainty in the gold market is likely to persist in the coming months. As for the technical picture, experts believe that if prices break the historical high at $2,431.29, then the important psychological level of $2,500 will be the next target.