As the dollar weakened in the previous session, gold prices rose on Tuesday, following a three-week low, as investors awaited key U.S. inflation data and major central bank policy meetings for interest rate indications.
As of 07:37 GMT, spot gold was up 0.2% at $1,985.49 per ounce. Futures for U.S. gold increased 0.4% to $2,000.70.
A 0.2% decline in the dollar’s value relative to its competitors reduced the cost of gold for other currency holders. [USD/]
“The Fed’s potential caution in implementing rate cuts may not align with the prevailing dovish market sentiment.” As a consequence, certain short-term investors and profit-seekers have placed speculative bets on gold, according to Kelvin Wong, an OANDA senior market analyst specializing in Asia Pacific.
Last week’s positive employment report in the United States dampened expectations that the Federal Reserve might reduce interest rates as early as March.
At 13:30 GMT, all eyes will be on the Consumer Price Index (CPI) report for the United States.
Reuters surveys economists who anticipate headline inflation to remain unchanged in November and core inflation to remain stable at a 4% annual rate, which is significantly higher than the Fed’s target of 2%.
On Wednesday, following a two-day monetary policy meeting, the Federal Open Market Committee will render an interest rate decision and make public a summary of its economic projections.
According to the CME FedWatch Tool, traders widely anticipate the Fed to maintain rates between 5.25% and 5.50% this week and are pricing in a 77% possibility of a rate cut in May.
In general, non-interest-bearing bullion is favoured when interest rates are reduced.
The Bank of England and the European Central Bank will hold policy meetings on Thursday.
Spot gold may retest a support level of $1,977 per ounce; a breach below that level could pave the way for a range between $1,944 and $1,962, as predicted by Reuters technical analyst Wang Tao. […] [TECH/C]
Palladium increased by 1% to $966.73 per ounce, platinum rose 0.4% to $913.85, and silver rose 0.4% to $22.88 per ounce.
