Investors are watching Powell's speech, waiting for this week's key inflation data to provide clues for the Federal Reserve to cut interest rates

Daocheng Technology Financial News - Tuesday (May 14) Asian session,Spot goldThe price of gold fell 1% on profit taking to close at $2336.10 an ounce on Monday as investors await this week's key inflation data for the yearUS interest rate cutProvide more clues. In addition, the chairperson of the Federal ReservePowellThere will also be speeches on the day, and investors need to pay attention.

U.S. gold futures closed 1.3% lower, settling at $2,343 an ounce.

(Daily chart of spot gold)

"This could be some exit from the gold market ahead of some risk events later in the week, including [Federal Reserve chairperson] Powell speaking and producer price index (PPI) and consumer price index (CPI) releases," said Phillip Streerial, chief market strategist at Blue Line Futures.

Tai Wong, an independent metals trader in New York, said: "Gold bulls should be concerned that the Fed needs weaker inflation data, not just weaker employment data, to justify a rate cut."

The survey showed that the vast majority of economists surveyed believe the Federal Reserve will cut key interest rates starting in September and twice this year, and they also generally raised their inflation forecasts for the second month in a row.

According to CME's FedWatch tool, traders currently expect a 63% chance of a rate cut in September.

The focus of the market this week will be the US PPI data released on Tuesday, followed by the CPI data on Wednesday.

Consumer prices in Quarter 1 were higher than expected, suggesting the Fed may cut rates less this year. Then came weaker-than-expected job growth in April, leading investors to rekindle bets on two 25 basis point rate cuts this year, but that view depends heavily on softening inflation.

Ian Lyngen, head of US interest rate strategy at BMO Capital Markets in New York, said: "The importance of CPI for the Fed between now and the end of the year cannot be overstated. This is the data that either confirms that the last mile of inflation will be very difficult, or marks a resumption of the trend of slower inflation in the second half of last year."

Wednesday's inflation report is likely to provide guidance on the Federal Reserve's policy outlook at its June 11-12 meeting, when Fed officials will update their economic and interest rate forecasts.

"If the data is stronger than expected, it will be very difficult for the Fed to signal'we're going to cut rates by 50 basis points' without rising unemployment," Lyngen said.

Economists surveyed expect the closely watched core consumer price index to rise 0.3% month-on-month, down from 0.4% in March and 3.6% year-on-year, down from 3.8% in March.

Federal Reserve Vice Chairperson Jefferson said on Monday that with a healthy economy, the central bank should keep monetary policy on hold until there are clear signs that inflation is moving back towards its 2 percent target.

The dollar index and U.S. Treasury yields fell slightly on Monday, limiting gold's downside slightly. U.S. 10-year Treasury yields fell 2 basis points to 4.623% in late trading. Two-year Treasury yields fell 1 basis point to 4.857%.

A report released by the Federal Reserve Bank of New York on Monday showed that Americans generally believed in April that inflationary pressures would increase in the coming years, and house prices would accelerate.

The dollar has performed well this year, helped by US exceptionalism, with much of the world still recovering from an epidemic and the US economy unexpectedly strong. However, the economic picture changed in the second quarter and the dollar's strength is likely to weaken as last week's jobless benefits data hinted at a softening in employment, said Kaspar Hense, senior BlueBay portfolio manager at RBC GAM in London.

"We think it's not just inflation data, but also labor market data that will soften," Mr. Hense said. Still, "there are questions about how inflation will perform and whether U.S. inflation will continue to rise as sharply as before. The dollar appears to be driven in large part by interest rates. Some of the dollar's strength may fade due to weaker employment data."

Although the market expects inflation to decelerate, Federal Reserve Vice Chairperson Jefferson said on Monday that he supports keeping interest rates on hold until there are clear signs that price pressures are easing.

The U.S. retail sales report will also be released on Wednesday, and the industrial production report will be released on Thursday.

It should be reminded that Federal Reserve Chairperson Powell and European Central Bank Governing Council Member Knott attended a meeting and delivered a speech on Tuesday. Investors need to pay attention, and in addition, pay attention to the speech of Federal Reserve Governor Lisa Cook.

At 07:24 Beijing time, spot gold was quoted at 2337.74 US dollars per ounce.