XAU/USD extends its upside above $2,180, eyes on US CPI, Retail Sales data

• Gold price gains momentum near $2,182, adding 0.22% on the day. 
• US Nonfarm Payrolls climbed by 275K in February; the unemployment rate increased to a two-year high of 3.9%.
• The signal of rising domestic demand in China’s economy in February lift the gold price. 
• The US February CPI and Retail Sales will be in the spotlight this week. 

Gold price (XAU/USD) extends the rally above $2,180 after reaching fresh all-time highs of nearly $2,200 during the early Asian session on Monday. The prospect that the Federal Reserve (Fed) will cut the interest rate this year lends some support to the yellow metal. Additionally, the ongoing geopolitical tensions also boost safe-haven demand. 

During the semiannual testimony on Capitol Hill last week, Fed Chair Jerome Powell said that the US economy is healthy and policymakers are not far from having enough confidence in inflation’s downward trajectory to begin cutting rates. Futures markets have priced in about 70% odds that the Fed will start cutting interest rates by mid-June and expect a full percentage point of rate cuts by the end of the year, according to the CME FedWatch Tools. 

Data released from the Labor Department on Friday revealed that the US economy added 275,000 jobs in February, stronger than the estimation of 200,000. The Unemployment Rate rose to 3.9% in February from 3.7% in January, the highest level in two years. The mixed report triggered the possibility that the Fed will cut interest rates by June.

China’s inflation report on Saturday suggested that consumption in China has returned to normal levels. The signal of rising domestic demand in China’s economy in February lift the gold price as China is the world’s top gold consumer. 

According to data from the National Bureau of Statistics (NBS) on Saturday, the Chinese Consumer Price Index (CPI) jumped by 0.7% YoY in February from a 0.8% decline in January, stronger than the expectation of a 0.3% rise. Meanwhile, the nation’s Producer Price Index (PPI) declined 2.7% YoY in February from a 2.5% decline in January, worse than the estimation and the previous reading of a 2.5% decline.

Gold traders will focus on the US CPI and Retail Sales for February for fresh impetus, due later this week. The CPI inflation figure is expected to show an increase of 0.4% MoM and 3.1 YoY in February, while the Retail Sales is forecast to climb 0.7% MoM in the same period.