Gold prices remained subdued on Wednesday ahead of crucial US inflation data expected this week, which could provide more clarity on the timing of the Federal Reserve’s first interest rate cut this year.
Spot gold was steady at $2,319.95 an ounce, as of 0337 GMT. U.S. gold futures held steady 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 stronger U.S. dollar overnight following hawkish comments from the Fed led to some weakness in gold prices this morning amid calls for more rapid easing of The policy has not been validated by policymakers,” said Yeap Jun Rong, market strategist at IG.
Michelle Bowman, governor of the US Fed, reiterated her view on Tuesday that maintaining the key rate “for a while” will likely be enough to keep inflation in check, but she also reiterated her willingness to increase the costs of loan if necessary. For her part, Lisa Cook, Governor of the Fed, declared that “at some point” it will be time to reduce interest rates.
Estimates of U.S. gross domestic product for the first quarter are due Thursday, and the Personal Consumption Expenditures (PCE) Price Index on Friday.
“The risk comes from any upside surprises in inflation, which could trigger more uncertainty around the Fed’s policies and could lead to a further unwinding of the yellow metal,” added IG’s Jun Rong.
Higher rates increase the opportunity cost of holding bullion without yield.
“Gold price declines remain relatively shallow thanks to buyers pulling out of the price chase,” Tim Waterer, chief market analyst at KCM Trade, said in a note.
Mr Waterer added that the $2,368 level would need to be breached for gold to surpass last week’s highs.
Spot silver rose 0.1 percent to $28.94, platinum climbed 0.8 percent to $989.70, while palladium lost 0.5 percent to $943.49.
