Gold dips as dollar rose, focus on US inflation data

Gold prices fell on Wednesday due to the rise in the dollar, but the yellow metal was trading in a narrow range as investors awaited more evidence of the policy of the US central bank known as the Federal Reserve.

According to Reuters, gold fell in spot transactions by 0.1% to $2,176.29 per ounce by 0310 GMT. Gold futures in the United States also fell 0.1% to $2,175.20 an ounce.

The dollar index increased 0.2% against a basket of major currencies, which increases the cost of purchasing gold for holders of other currencies.

Gold prices have risen more than 5% so far this year and reached a record high last week, supported by increased bets on the US Central Bank shifting towards monetary easing, continued demand for the precious metal as a safe haven, and central banks’ purchases of bullion amid geopolitical tension.

“It is difficult to build an extreme bearish case for gold prices given the current geopolitical backdrop and potential monetary easing,” said Matt Simpson, chief analyst at City Index.

The US central bank kept the interest rate unchanged between the range of 5.25% and 5.5% last week, and maintained its expectations of making three cuts by the end of the year.

Investors are now awaiting US core personal consumer spending index data scheduled for release on Friday to see when the Federal Reserve may start cutting interest rates.

According to the CME Group’s Fed Watch service, traders expect a 72% probability that the US central bank will start cutting interest rates in June.

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

As for other precious metals, silver settled in spot transactions at $24.42 per ounce, platinum fell 0.1% to $902.15, and palladium fell 0.6% to $988.15.