• Gold falls 1%, retreating from $2,350, despite typically supportive lower US Treasury yields.
• US economic events, including inflation data and a speech by Fed Chair Powell, are poised to influence markets.
• Fed Vice-Chairman Jefferson was hawkish, stressed importance of driving inflation toward 2% target.

Gold prices retreated sharply on Monday from near $2,350 even though US Treasury yields declined, undermining appetite for the Greenback. Traders brace for a busy economic docket in the United States (US) led by the release of inflation figures, Retail Sales, and the May 14 speech of Federal Reserve (Fed) Chair Jerome Powell.

Earlier on Monday, Fed Vice-Chairman Philip Jefferson addressed the media in a Q&A session at the Cleveland Fed. He said, “We continue to look for additional evidence that inflation is going to return to our 2% target.”

The XAU/USD trades at $2,336, down 1% amid a risk-on impulse. Wall Street continues to post gains. Recent labor market data, such as April’s Nonfarm Payrolls and last week’s Initial Unemployment Claims, could pressure the Fed. In its latest monetary policy statement, officials recognized that the risks to achieving the Fed's dual mandate of fostering maximum employment and price stability have become more balanced over the past year.

Meanwhile, the US Bureau of Labor Statistics (BLS) is expected to release the producer and consumer inflation data for April on May 14 and 15. If price pressures reaccelerate, the Fed can hold rates “higher for longer.”