Gold sticks close to two-week low ahead of PCE data

Bengaluru — Gold prices steadied on Thursday after falling to a two-week low in the previous session, while investors awaited US inflation data for insights into how soon the Federal Reserve will cut interest rates.

Spot gold unchanged at $2,299.55/oz by 2.55am GMT. Bullion fell to its lowest since June 10 on Wednesday.

US gold futures fell 0.1% to $2,310.20.

The dollar hovered near a eight-week high, making bullion more expensive for other currency holders, while benchmark 10-year yields also held firm.

“The ascent by the US dollar accompanied by rising bond yields have left the gold price swimming against the tide,” said Tim Waterer, chief market analyst at KCM Trade.

Fed governor Michelle Bowman on Wednesday reiterated her baseline view that “inflation will decline further with the policy rate held steady”, and that rate cuts will “eventually” be appropriate if inflation does move sustainably towards 2%.

Data due this week include the US first-quarter GDP estimates are due at 12.30pm GMT and the personal consumption expenditures (PCE) inflation data on Friday.

“If the core PCE print leaves financial markets pessimistic about when that first Fed interest rate cut may occur, gold could slip back towards $2,270 level,” Waterer said.

While bullion is considered an inflation hedge, higher rates increase the opportunity cost of holding the non-yielding asset.

“Gold prices remain tangled in a tug of war between a less dovish Fed and high levels of geopolitical tension,” analysts at BMI said in a note dated Wednesday. “The main driver of easing gold prices in the longer term will be greater risk-on sentiment as the global economy recovers in the later part of the decade.”

Spot silver fell 0.1% to $28.74, platinum was down 0.3% to $1,007.33, while palladium gained 0.2% to $930.39.

Reuters