Gold Price Forecast: XAU/USD trades with mild negative bias ahead of Chinese data

Gold Price (XAU/USD) hovers around $2,155 during the early Asian trading hours on Monday. The downtick of yellow metal is backed by US February stronger-than-expected inflation data, which might delay the interest rate cuts by the Federal Reserve (Fed). Meanwhile, the positive developments surrounding stimulus measures from Chinese authorities or strong demand from China might lift the gold price. 

The recent US economic data suggests that inflation remains elevated, and this might convince the Fed to remain on hold until there is more evidence of inflation easing. The markets anticipate that the FOMC will hold its interest rate at its March meeting on Wednesday, and there will be no rush to cut rates as Fed officials need more time to gain greater confidence to bring inflation down to the central bank target. It’s worth noting that the high for a longer rate could diminish the appeal of non-yielding metals and weigh on the gold price. 

The University of Michigan revealed on Friday that the Consumer Sentiment Index came in weaker than expected, dropping to 76.5 in March from 76.9 in the previous reading. Meanwhile, the one-year and five-year inflation expectations were unchanged at 3.0% and 2.9%, respectively. Finally, US Industrial Production improved to 0.1% MoM in February from a downwardly revised -0.5% MoM in January. 

On the weekend, China's finance minister Lan Fo emphasized the need for continued implementation of a proactive fiscal policy and enhancing the country's economic recovery. Investors have increased their bets that policymakers would implement additional monetary easing measures, including a reduction in bank reserves. The positive developments surrounding the Chinese economy might boost the gold price, as China is the world's second-largest economy and the world’s major buyer of gold.

Gold traders will closely monitor the Chinese Retail Sales and Industrial Production for February, due on Monday. The FOMC interest rate decision and press conference will be in the spotlight on Wednesday. These events could give a clear direction to the gold price.