Gold rangebound as traders await US inflation data
The metal battles to find direction as investors wait for cues on monetary policy from the European Central Bank
Bengaluru — Gold traded in a tight range on Wednesday as investors eyed more data on US inflation and cues on monetary policy from the European Central Bank (ECB), while weaker bond yields offered some support to the metal.
US benchmark 10-year treasury yields were hovering near more than a month’s low, while the dollar index held firm.
Spot gold was up 0.1% at $1,893.80/oz, as of 5.24am GMT, while US gold futures rose 0.1% to $1,896.60.
“What I am looking at is the build-up to the FOMC [Federal open market committee] meeting ... the Fed may start to discuss about taper and this is getting highlighted,” said Stephen Innes, managing partner at SPI Asset Management.
“The market is still of the opinion that it [the Fed] is going to a dovish taper and we have inflation aspects, which should be relatively positive for gold.”
On Thursday, traders will keep a close watch on the ECB’s policy meeting as well as the US consumer price index report to gauge the Federal Reserve’s steer on monetary policy.
The US central bank is expected to hold its policy meeting next week.
US treasury secretary Janet Yellen on Sunday noted that a slightly higher interest-rate environment “would be a plus for society’s point of view and the Fed’s point of view”.
Data out of China showed May factory gate prices rose at their fastest pace in over 12 years, while consumer prices increased for the third consecutive month.
“We expect further gains [to gold] in the coming months amidst rising inflation pressuring US treasury real yields, a weak US dollar and renewed waves of Covid-19 infections,” Fitch Solutions said in a note.
Silver was steady at $27.64/oz, palladium eased 0.1% to $2,803.13, while platinum fell 0.1% to $1,160.08.
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