• Gold price bounces from $2,040 as investors see the Fed reducing interest rates in June.
• Fed policymakers are reluctant to offer concrete timing for rate cuts.
• The US Dollar will be guided by the ISM manufacturing PMI.

Gold price (XAU/USD) rebounds from $2,040 in Friday’s European session as market expectations for rate cuts in the June policy meeting remain alive. The United States core Personal Consumption Expenditure Price Index (PCE) data for January, released on Thursday, was in line with expectations. 

The annual US core inflation data decelerated to 2.8%. This was the lowest increase in three years. However, bets supporting rate cuts have not intensified as the impact of soft annual core inflation figure was offset by a 0.4% month-on-month increase in the same.

Although the pace at which monthly core PCE grew in January was already expected, it was higher than the growth rate of 0.2%, which is necessary for inflation to return sustainably to the 2% target.

The moderate slowdown in price pressures fails to move market expectations for rate cuts in the June meeting. Therefore, investors will shift focus to the testimony of Fed Chair Jerome Powell before Congress and the labor market data for February, which are scheduled for next week. This will provide meaningful insights into the interest rate outlook. 

But before that, the US Institute of Service Management (ISM) Manufacturing PMI data for February will be in the spotlight, which will be published at 15:00 GMT