Stronger dollar keeps gold rangebound

Bengaluru — Gold prices edged lower on Wednesday due to an uptick in the dollar, though bullion traded in a narrow range as investors stayed on the sidelines awaiting more cues on US Federal Reserve policy.

Spot gold was down 0.1% at $2,176.29/oz by 3.10am GMT. US gold futures also edged 0.1% lower to $2,175.20.

The dollar index strengthened 0.2% against its rivals, making gold more expensive for other currency holders.

Gold prices have risen more than 5% so far in 2024 and hit a record high last week, helped by increasing bets for Fed easing, persistent safe-haven demand and central bank purchases amid geopolitical tensions.

“It’s difficult to construct an overly bearish case for gold prices with the current backdrop of geopolitics and potential central easing,” City Index senior analyst Matt Simpson said.

The US central bank left its funds rate on hold between 5.25% and 5.5% last week and retained projections for three cuts by year-end.

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

Investors now look forward to US core personal consumption expenditures (PCE)  price index data due on Friday to gauge when the Fed may begin cutting interest rates.

Traders are pricing in a 72% 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.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.62% to 830.15 tonnes on Tuesday.

“Aligned with the supported yet more sideways price action, open interest figures show that most of the early March inflows into gold have so far stuck,” JPMorgan said in a note.

Spot silver was steady at $24.42/oz, platinum eased 0.1% to $902.15 and palladium fell 0.6% to $988.15.

Reuters