Gold price supported by European Central Bank sentiment

European Central policymaker, Peter Kazimir, said on Monday that inflation easing was good news but added that it was not a reason to slow the pace of interest rate hikes, as reported by Reuters. Governing Council member Ignazio Visco also said on Monday that Italy can deal with the impact of a 'gradual but necessary' rate of monetary policy tightening. Governing Council member and Governor of Austria's central bank Olli Rehn made some comments on the European Central Banks' interest rates policy during their appearances over the weekend also as did ECB governing council member Klaas Knot on Sunday, advocating steep rate hikes. "Expect us to raise rates by 0.5% in February and March and expect us to not be done by then and that more steps will follow in May and June," Knot said.

Federal Reserve outlook and Gold price implications

An already downtrodden US Dollar took the brunt and the Gold price flourished with investors now awaiting US economic data due this week that could impact the Federal Reserve's policy path. Traders are mostly pricing in that the Federal Reserve will raise rates by 25 basis points (bps) at the January 31 - February 1 policy meeting, after slowing its pace to 50 bps in December, following four straight 75-bp hikes. Meanwhile, the Gold price tends to benefit due to lower interest rates that otherwise decrease the opportunity cost of holding the non-yielding asset.