Gold price (XAU/USD) drifts lower to $2,027 during the early Asian session on Monday. The robust US economic data have triggered the expectation that the Federal Reserve (Fed) might delay interest rate cuts, which boost the US Dollar (USD). The key support level of yellow metal is seen at the $2,000 psychological mark. The US Core Personal Consumption Expenditures Price Index (Core PCE) for December on Friday might trigger volatility in the market.
US consumer sentiment improved in January, hitting the highest level since July 2021. The University of Michigan's preliminary reading on the consumer sentiment index arrived at 78.8 in January versus 69.7 in December, better than the market expectation of 70.0.
On Friday, San Francisco Federal Reserve Bank President Mary Daly stated that the central bank has a lot of work left to do on bringing inflation back down to the Fed's 2% target and that it’s premature to think about interest rate cuts. Nonetheless, two key events this week might determine at least which way central bank policymakers could lean on policy. The US GDP growth numbers will be due on Thursday, and the Core PCE will be released on Friday. The weaker US data is likely to convince the Fed to tilt toward the dovish side and cap the downside of the gold price.
The People’s Bank of China is expected to leave the benchmark one- and five-year loan prime rates (LPR) unchanged at 3.45% and 4.20%, respectively. Bearish sentiment toward China has intensified as the latest economic data indicates that the world's second-biggest economy continues in a slump. Any negative development surrounding Chinese economy could drag the gold price lower, as China is one of the world's largest gold consumers.