Gold prices remained subdued on Wednesday, ahead of crucial U.S. inflation data due this week, which could offer greater clarity on the timing of the Federal Reserve’s first interest rate cut this year.
Spot gold was flat at $2,319.95 per ounce, at 0337 GMT. U.S. gold futures remained firm at $2,331.30.
The dollar rose 0.1% against its rivals, making gold more expensive for holders of other currencies, while benchmark 10-year yields also rose.
“Rising Treasury yields and a strengthening US dollar overnight, in the wake of the Fed’s false comments, led to some weakness in gold prices this morning as calls for faster policy easing it hasn’t found much validation from policymakers,” said Yeap Jun Rong, market strategist at IG.
US Fed Governor Michelle Bowman on Tuesday reiterated her view that holding the policy rate steady “for some time” will likely be enough to bring inflation back under control, but she also reiterated her willingness to increase borrowing costs if necessary. Meanwhile, Fed Governor Lisa Cook said “at some point” it will be time to cut interest rates.
U.S. first-quarter gross domestic product estimates are due on Thursday, with the Personal Consumption Expenditures (PCE) price index report due on Friday.
“Risks are any upside surprise in inflation, which could trigger more uncertainty over Fed policies and could see further weakening of the yellow metal,” added IG’s Jun Rong.
Higher rates increase the opportunity cost of holding unprofitable bullion.
“Gold price declines remain relatively shallow, courtesy of buyers coming into play during price pullbacks,” Tim Waterer, chief market analyst at KCM Trade, said in a note.
Waterer added that it would need to break above the $2,368 level for gold to break out of last week’s highs.
Spot silver rose 0.1% to $28.94, platinum rose 0.8% to $989.70, while palladium lost 0.5% to $943.49.
