Gold rangebound ahead of US inflation data

Bengaluru — Gold prices were stuck in a tight range on Tuesday as investor focus turns to US inflation data due later this week, which could shed more light on the timing of the Federal Reserve’s first interest rate cut in 2024.

Spot gold was flat at $2,170.59/oz by 3.10am GMT. US gold futures edged 0.2% lower to $2,171.20/oz.

“We are lacking fresh catalysts, but for now the market seems to be consolidating — taking the proverbial breath after a fairly aggressive run,” Kyle Rodda, a financial market analyst at Capital.com said.

“The next move probably hinges on this week’s PCE [personal consumption expenditures] index release. Evidence of further disinflation in the US, which would ease fears of prices accelerating or at least re-anchoring at a higher level, would be very bullish for gold.”

Gold prices hit a record high last week after Fed policymakers indicated they still expected to reduce interest by three-quarters of a percentage point by the end of 2024, despite recent high inflation readings.

Chicago Fed Bank president Austan Goolsbee said on Monday that at the Fed’s policy meeting last week he pencilled in three rate cuts for 2024.

Meanwhile, Fed governor Lisa Cook cautioned the US central bank needed to proceed carefully as it decided when to begin cutting interest rates.

Investors now look forward to US core PCE price index data due on Friday. PCE price index is seen rising 0.3% in February, which would keep the annual pace at 2.8%.

Traders are pricing in a 70% probability that the Fed will begin cutting rates in June, according to the CME Group’s FedWatch Tool. Lower interest rates reduce the opportunity cost of holding bullion.

The dollar index, meanwhile, slipped 0.3% against its rivals, making gold less expensive for other currency holders.

Spot silver eased 0.2% to $24.63/oz, platinum fell 0.1% to $901.30 and palladium edged 0.1% lower to $1,003.75.

Reuters