The price of gold fell by about 1.6% after yesterday's 2.26% collapse, and reached its lowest level since April 5 amid reduced tensions in the Middle East and profit-taking by investors after a large-scale rally since mid-February.
Experts said that the sharp decline in gold prices overnight may have also tripped weak longs, in turn fueling an even larger decline. Meanwhile, gold is supported by the negative dynamics of the US currency - the US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.05% to 106.04.
Investors are also preparing for the publication of US GDP data and the personal consumption expenditures price index - the Fed's preferred inflation indicator. If the data exceeds forecasts, market participants may again postpone the expected timing of the Fed's monetary policy easing, which is likely to put additional pressure on gold. Higher interest rates reduce the appeal of holding non-yielding gold. According to the CME FedWatch Tool, markets now fully account for just one rate cut this year (markets see a 15.2% probability of a 25 basis point rate cut at the Fed meeting in June, and a 41.5% probability of a rate cut in July). The move is expected to take place in September at the earliest - that is, after similar actions by the European Central Bank and the Bank of England, which are expected to begin easing policy in the summer.