Gold moved lower in the $2,325 area in early Asian trade on Monday, prompted by a more cautious stance by the Federal Reserve (Fed) recently.
Market participants will be watching the ISM Purchasing Managers' Index (PMI) report for June which is expected to increase to 49.0 from 48.7 in May.
Meanwhile, the price of gold is now at $2,325.77 which is a loss of 0.05% since it opened at the beginning of trading this morning.
Last week, the US Personal Consumer Expenditure (PCE) Price Index reading declined as expected although it remained high. This sentiment triggered a more cautious stance by the Fed.
Data released by the US Bureau of Economic Analysis on Friday showed that headline PCE rose 2.6% on an annual basis in May compared to 2.7% in April which was in line with market estimates.
In addition, Core PCE inflation was also about the market forecast at 2.6% from 2.8% previously.
The President of the San Francisco Fed, Mary Daly said earlier that the monetary policy is in a stable condition and it is too early to determine the appropriate time to reduce interest rates for now. If the inflation rate is still stubborn and falling slowly, the rate will need to be higher for longer.
That situation will continue to pressure gold's position to surge higher due to the increased opportunity cost of holding the asset.
In addition, New York Fed President John Williams said US inflation is still at a problematic level and the US central bank is now on a mission to lower it.
Fed Governor Michelle Bowman stated that the Fed's current policy should be enough to drag inflation towards the target. However, the central bank still does not act because the data shows that inflation is still 'sticky'.
However, continued geopolitical tensions and uncertainty after the first round of French parliamentary elections may increase the safe-haven flow of gold and drag the USD currency position lower.
