Gold rebounded to a certain extent but could remain under pressure after a significant decline last week, influenced by robust US jobs data and reports that China’s central bank paused its gold purchases. Furthermore, gold prices could be capped as investors lower their expectations for an interest rate cut by the Federal Reserve in September. This has led to elevated yields on US Treasury bonds and led to a strengthening of the US Dollar. The focus is now on tomorrow’s release of US inflation data, and the Fed’s interest rate decision.

Gold could potentially rebound if core inflation data is weaker than expected, supporting an earlier rate cut. Additionally, the precious metal could find support due to the uncertainty stemming from the political developments in Europe. French President Emmanuel Macron’s decision to call snap elections has increased political uncertainty in France, the Eurozone’s second-largest economy. Looking ahead, on the demand side, China could resume its gold purchases once prices stabilise from the record highs reached in May.