Gold falls as focus turns to US inflation data

Bengaluru — Gold prices slipped from near record-high levels on Tuesday, as traders braced for key US inflation report that could give more clarity on when the Federal Reserve might start cutting its interest rates.

Spot gold fell 0.2% to $2,178.53/oz at 4.24am GMT, after rising for nine consecutive sessions. Bullion hit a record peak of $2,194.99 on Friday.

US gold futures also dipped 0.2% to $2,185.00.

“Following the stellar run-up in gold prices, it does call for some near-term breather,” IG market strategist Yeap Jun Rong said.

“Progress in US inflation has somewhat stalled in the January’s read, but follow-up comments from policymakers seem to suggest that they are willing to look beyond it as a one-off. Another surprise run of hotter-than-expected inflation data for February will likely challenge that, which could drive some near-term unwinding in gold prices.”

The US consumer price index (CPI) report for February, due at 12.30pm GMT, is likely to rise 0.4% for the month and keep the annual pace steady at 3.1%.

Traders are pricing in three to four quarter-point (25 basis points) US rate cuts, with a 70% chance for the first in June, as per LSEG’s interest rate probability app. Lower rates boost the appeal of non-yielding bullion.

Also happening later in the day, the US treasury is set to sell $39bn in 10-year notes.

The bond auction was secondary in terms of the broader interest rate outlook, and the main focus was still on the consumer and producer price numbers this week, but if there was not much demand for bonds, it could push yields higher, reducing gold’s appeal, said Tim Waterer, chief market analyst at KCM Trade.

The dollar held broadly steady.

Spot platinum fell 0.3% to $930.00/oz, palladium edged 0.1% lower to $1,029.38, while silver advanced 0.1% to $24.45.

Reuters