Gold Roses waiting for U.S. inflation data

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Gold prices rose on Tuesday after falling more than 1% in the previous session ahead of key U.S. inflation data.

Spot gold
It gained 0.6 percent to $2,001.89 an ounce. US Gold Futures
It rose 0.7 percent to $2,017.40.

Dollar index is flat.

Investors are now awaiting U.S. consumer price data due on Wednesday for more clarity on the direction of interest rates at the Federal Reserve’s May monetary policy meeting.

Christopher, an FX strategist at OCBC Bank, said: “The better-than-expected data may indicate that the Fed may raise interest rates again in May… Gold’s rally is a bit overdone… The possibility of another Fed hike may somehow reduce the overshoot. “yellow.

A U.S. jobs report on Friday showed a tight labor market and expectations for a rate hike by the Federal Reserve next month increased. According to the CME FedWatch tool, the market is pricing in a 71.7% chance of a 25 basis point hike.

When interest rates are raised to reduce inflation, the opportunity cost of holding non-yielding bullion increases.

Minutes of the Federal Reserve’s March 21-22 monetary policy meeting will also be released on Wednesday.

“In the near term, there is also a bearish technical setup for gold prices to correct lower,” OCBC’s Wong added.

Problems in the financial system prompting the central bank to flood banks with loans are not collateral damage from the central bank’s aggressive efforts to bring down inflation, New York Federal Reserve Bank President John Williams said on Monday.

Consumer inflation in China, the largest consumer of the precious metal, hit the lowest level since September 2021 in March, data on Tuesday showed, pointing to weak demand amid an uneven economic recovery.

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