Gold prices steady as focus turns to US inflation data

Gold prices remained stable on Tuesday as the dollar weakened and investors awaited important U.S. inflation data that could provide insight into the Federal Reserve’s timeline for interest rate cuts. The spot price of gold held at $2,349.89 per ounce at 0600 GMT, following a 1% increase in the previous session. U.S. gold futures also rose 0.7% to $2,350.70. Kelvin Wong, a senior market analyst for Asia Pacific at OANDA, warned that a strong dollar and a shift in U.S. monetary policy towards interest rate hikes could pose a risk to gold prices. However, in the short term, Wong believes that spot gold will likely remain positive, with $2,310 serving as a crucial support level for the week.
The release of the core personal consumption expenditures price index (PCE), which is the Federal Reserve’s preferred inflation measure, is scheduled for Friday.

Last week, the minutes from the Fed meeting indicated that the current policy response would involve keeping the benchmark policy rate unchanged, but there were also discussions about the possibility of further rate hikes.

Traders’ bets are showing increasing doubt that the U.S. central bank will lower rates more than once in 2024. According to the CME FedWatch Tool, there is currently a 63% chance of a rate cut by November.

While bullion is typically considered an inflation hedge, higher rates make it less attractive to hold non-yielding gold due to the opportunity cost involved.

Technical analyst Wang Tao from Reuters suggests that spot gold may surpass the nearest resistance level at $2,357 per ounce and potentially reach the range of $2,363-$2,373.

Vietnam’s central bank announced on Monday that it will cease the auctioning of gold in the domestic market and implement a new measure to stabilize domestic prices.
Silver prices increased by 0.1% to reach $31.71, while platinum saw a rise of 0.2% to $1,055.85. Palladium also experienced a gain of 0.4% and reached $992.32.