By Sherin Elizabeth Varghese
(Reuters) – Gold prices held steady on Tuesday while the dollar fell as investors watched key U.S. inflation data that could provide clues to how quickly the Federal Reserve can cut interest rates.
Spot gold was flat at $2,350.85 an ounce as of 0350 GMT, after rising about 1% in the previous session.
U.S. gold futures rose 0.8% to $2,352.00.
“A very strong dollar view, supported by a change in the US monetary policy stance, with the Fed looking for evidence to trigger rate hikes rather than easing, could be a major risk as we see further could see corrective movement in spot gold.” said Kelvin Wong, senior market analyst for Asia Pacific at OANDA. [USD/]
However, in the short term, spot gold is still leaning more to the upside than the downside, and $2,310 is a key short-term support for this week, Wong added.
The core price index for personal consumption expenditures (PCE), the Fed’s inflation measure, will be released on Friday.
Minutes of the Fed meeting released last week showed that the policy response would for now involve keeping policy rates at current levels, but would also reflect discussions on possible further increases.
Traders’ bets indicated growing skepticism that the U.S. central bank will cut rates more than once in 2024, with a roughly 62% chance of a rate cut in November currently priced in, according to the CME FedWatch Tool.
Bullion is known as an inflation hedge, but higher interest rates increase the opportunity cost of holding unprofitable gold.
Vietnam’s central bank will stop auctioning gold on the domestic market and launch a new measure to stabilize domestic prices, it said on Monday.
Silver rose 0.2% to $31.73, platinum rose 0.4% to $1,058.50 and palladium rose 0.2% to $991.18.
(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Sherry Jacob-Phillips and Sohini Goswami)
