Gold prices hover near three-week low as dollar firms and investors focus on US inflation data

Gold prices hovered near a three-week low on Monday as the dollar held firm and investors awaited U.S. inflation data for more cues on whether the Federal Reserve will stand pat on interest rates or raise them higher.

Spot gold was up 0.1 per cent at $1,938.12 per ounce, as of 0714 GMT., while U.S. gold futures  gained 0.3 per cent to $1,942.50.

Gold fell 2.8 per cent last week, logging its worst week in more than a month, as Fed Chair Jerome Powell’s hawkish remarks pushed back any notion about interest rate cuts.

“People are kind of focused on whether the CPI data (will) allow the Fed to pause or hike. So I think the markets (are) a little bit sideways ahead of that data,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.

U.S. consumer prices index (CPI) data is due on Tuesday. Core CPI month-over-month is expected to have risen 0.3% in October, with a year-over-year increase of 4.1 per cent, a Reuters poll showed. Both estimated gains are the same as in September.

The dollar was up 0.1 per cent against its rivals after hitting a one-week high in the previous session, making bullion less attractive for other currency holders.

Holdings of SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, rose 0.10% to 868.14 tonnes on Friday.

“Other than geopolitical risks-driven haven demand and central bank purchases, the macroeconomic backdrop is turning supportive for gold,” ANZ analysts said in a note.

“The U.S. monetary tightening cycle is nearing an end and the USD has peaked. This could see US 10-year yield and the USD moderating, which will support investment demand of gold.”

Elsewhere, spot silver fell 0.4% to $22.12 per ounce, while platinum gained 0.7 per cent to $845.60.

Palladium firmed 0.5% to $967.85 per ounce but was holding near its lowest level since 2018.

 Anjana Anil – Reuters