Gold lacklustre as traders wait for rate clues from Fed

Bengaluru — Gold prices were flat on Monday, as investors awaited US inflation print due this week to strengthen their bets on the size of a likely reduction in Federal Reserve’s interest rates.

Spot gold held its ground at $2,497.25/by 3.05am GMT. US gold futures edged 0.1% higher to $2,526.10.

Major data points this week include the August US consumer price index (CPI) due on Wednesday, followed by producer price index (PPI) on Thursday.

"Gold has been content to just drift within an earshot of the $2,500 level ahead of key event risk in the form of CPI on deck this week and if that comes in below expectations, a stronger story will play out for gold,” said Tim Waterer, chief market analyst, KCM Trade.

“Support in the $2,470-$2,480 range has limited downside moves for gold, so this will be a key area to watch in case gold comes under selling pressures.”

A low interest rate environment tends to boost non-yielding bullion’s appeal.

Fed funds futures traders are now pricing a 69% chance of a 25 basis point (bp) cut at the Fed’s September 17-18 meeting, and a 31% chance of a 50bp reduction, according to the CME FedWatch Tool.

Data on Friday showed that US employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested the labour market was not falling off the cliff to warrant a half-point rate cut.

Meanwhile, China's central bank held back on buying gold for its reserves for a fourth consecutive month in August, official data showed on Saturday.

Key metals consumer China’s consumer prices accelerated in August, while producer price deflation worsened, as Beijing maintained efforts to reinvigorate domestic demand.

Spot silver rose 0.3% to $27.99/oz, platinum gained 1% to $930.75 and palladium was up 0.7% at $916.90

Reuters