XAU/USD extended gains above $3,770 as the week opened after the release of US inflation data that was in line with expectations and reinforced bets that the Federal Reserve (Fed) will continue to cut interest rates later this year.
At 9.15 am, gold was at $3,778, up 0.50% since it opened in early Asian trading on Monday.
The Fed’s inflation gauge, the US Personal Consumer Expenditures (PCE) Price Index rose to 2.7% in August from 2.6% in July, in line with market consensus.
The market is now pricing in a near 88% chance of a Fed rate cut in October and a 65% chance of another cut in December.
Lower interest rates could reduce the opportunity cost of gold holders, supporting the precious metal to move higher.
For now, market players will be watching for clues from Fed officials' speeches this week, particularly Fed Governor Christopher Waller, Cleveland Fed President Beth Hammack, St. Louis Fed President Alberto Musalem, New York Fed President John Williams and Atlanta Fed President Raphael Bostic.
Any hawkish comments from Fed officials could boost the US Dollar (USD) and weigh on the safe-haven commodity.
