XAU/USD edged higher below the mid-2050s, focusing on US inflation data.

• Despite the USD recovery, gold prices rose near $2,045.
• U.S. nonfarm payrolls (NFP) performed better than expected, rising 216K in December compared to 173K in December.
• Traders will closely monitor the U.S. Consumer Price Index (CPI) due Thursday.

Gold prices (XAU/USD) remained positive despite a rebound in the US dollar (USD) in the early Asian session on Monday. Stronger-than-expected US labor data on Friday boosted demand for greenbacks. Nonetheless, inflation data this week will be very important. At press time, gold is trading at $2,045, up 0.06% for the day.

Meanwhile, the US Dollar Index (DXY), which measures the USD’s value against a weighted basket of currencies used by US trading partners, rebounded from a late-December low to 102.50, up 0.04% on the day.

US inflation data for December will be a highlight. The consumer price index (CPI) is expected to rise by 3.2% compared to the same period last year, and the core CPI is expected to ease from 4.0% in the previous month to 3.8%. If the data is strong, this could push the US dollar higher and weigh on USD-denominated gold.

On Friday, U.S. nonfarm payrolls (NFP) were better than expected, up 216K compared to December’s 173K. During the same period, the unemployment rate was 3.7%, exceeding the market consensus of 3.8%. Average hourly earnings rose 4.1% in December, up from 4.0% in the previous figure. Traders are lowering bets on interest rate cuts by the Federal Reserve. According to the CME Fedwatch tool, the Fed funds futures market has a 56% chance of a March rate cut by the Fed.

Going forward, U.S. inflation data, as measured by the Consumer Price Index (CPI), is scheduled to be released on Thursday. On Friday, China’s CPI and the US Producer Price Index for December will be released. Additionally, many Fed officials are scheduled to speak this week, including Bostic (Monday), Barr (Tuesday), Williams (Wednesday), and Kashkari (Friday).