Gold locked in a narrow range, eyes on US inflation data

Gold prices remained range-bound on Tuesday as investors turned focus to US inflation data due later this week, which may shed more light on the timing of the US central bank’s first interest rate cut this year.

According to Reuters, gold settled in spot transactions at $2,170.59 per ounce by 0310 GMT, while US gold futures fell 0.2% to $2,171.20 per ounce.

“We are lacking new catalysts, but at the moment the market appears to be consolidating and catching its breath after a fairly strong rally,” said Kyle Rodda, financial markets analyst at Capital.com.

He added, “The next step will likely depend on the release of the (US) personal consumption expenditures index this week.” Any evidence of a continued slowdown in inflation in the United States, which would allay fears of accelerating prices or at least stabilize them at a high level, would have a good impact for gold.”

Gold prices reached a record level last week after policymakers at the Federal Reserve (the US central bank) indicated that they still expect to cut interest rates by three-quarters of a percentage point by the end of 2024 despite the recent high inflation readings.

Chicago Federal Reserve Bank President Austin Goolsbee said on Monday that he proposed during the US central bank’s monetary policy meeting last week three interest rate cuts for this year.

Meanwhile, Federal Reserve Board of Governors member Lisa Cook warned that the US central bank needs to proceed cautiously when deciding when to start cutting interest rates.

Investors are now looking forward to US Core Personal Consumption Expenditure Price Index data scheduled for release on Friday. The index is expected to rise 0.3% in February, which will maintain the annual rate at 2.8%.

Traders expect a 70% chance that the US central bank will start cutting interest rates in June, according to CME Group’s Fed Watch service.

Lower interest rates would reduce the opportunity cost of holding bullion.

The dollar index fell 0.3% against a basket of major currencies, making buying gold less expensive for holders of other currencies.

As for other precious metals, silver settled in spot transactions at $24.68 per ounce, platinum rose 0.4% to $906.10, and palladium also increased 0.4% to $1009.14.