• Gold price trades near a two-month high as Fed rate-cut bets for June deepen.
• Weak US Manufacturing PMI data weighs heavily on the US Dollar.
• Fed Powell may provide fresh insights on the timing for rate cuts this week.

Gold price (XAU/USD) hovers near a two-month high around $2,085 in Monday’s European session. The precious metal clings to gains amid increasing expectations of an interest-rate cut by the Federal Reserve (Fed) in its June monetary policy meeting. 

However, the uncertainty over rate cut expectations could rebound this week as Fed Chair Jerome Powell is set to comment on inflation, interest rates, and the economy in his testimony before Congress. 

Jerome Powell is expected to remain hawkish as Fed policymakers want to see inflation easing for months before changing their monetary policy stance. Strong labor market conditions allow them to patiently observe inflationary pressures and cut interest rates only after there is convincing evidence that inflation will decline to the desired target of 2%.

Apart from Fed Powell’s commentary, economic data such as the United States’ Institute of Supply Management (ISM) Services PMI, JOLTS Job Openings, and Nonfarm Payrolls data will remain in the spotlight.

Meanwhile, the US Dollar Index (DXY), which measures Greenback’s value against six major currencies, drops to 103.80, as the Manufacturing PMI surprisingly fell by 1.3 points to 47.8 from 49.1 in January. Investors had projected an increase to 49.5. The New Orders Index for the manufacturing sector fell back into contraction territory at 49.2 from 52.5 in January