XAUUSD Buy Idea

Investors will be looking at the U.S. producer price index and consumer price index data this week for any indication that price pressures are finally easing after months of strong inflation gave rise to fears that the Federal Reserve may not cut interest rates this year.

Markets got some relief earlier this month when Fed Chair Jerome Powell indicated that the central bank was still looking to eventually cut rates and the latest U.S. employment report showed signs of cooling in the labor market.

Analysts expect Wednesdays crucial CPI report to show underlying inflation rising 3.6% on a year-over-year basis, which would be the smallest increase in over three years.

But a hotter-than-expected inflation reading would likely price out rates cuts for the rest of the year, reigniting market volatility.