Gold started to reach above $2,395 as it opened in early trading on Monday. It surged following expectations of an interest rate cut by the Federal Reserve (Fed) in September after inflation figures eased.
Investors will be keeping a close eye on the Fed Interest Rate Decision and FOMC Statement early Thursday morning for future rate expectations.
At 9.30am, the price of gold was at $2,397.14, up 0.43% since it opened in Asian trading earlier in the week.
Recent evidence of inflation has strengthened expectations that the Fed will ease monetary policy in September and this will boost metal prices in the current market.
Last weekend showed that inflationary pressures and economic activity are decreasing in the United States which has paved the way for the Fed to cut its rates later this year.
The Consumer Expenditure (PCE) Price Index rose 0.1% and rose 2.5% on the year in the June report in line with market forecasts.
Also, Core PCE excluding food and energy rose to 0.2% from 0.1% in May. It also increased on an annual basis to 2.6% compared to 2.5% in the same period.
Market participants now set expectations as high as 90% for a Fed rate cut in September followed by November and December.
On the other hand, sluggish Chinese economic sentiment and low Chinese central bank buying interest may limit gold's gains as China is the world's largest producer and consumer of gold.
Analysts feel that gold may continue to face pressure from the effects of the prolonged high position as a result of falling demand in Asian markets.
