By Ashitha Shivaprasad
(Reuters) – Gold edged up on Tuesday as the dollar weakened, but prices kept to a tight range in the run-up to U.S. inflation data and the Federal Reserve’s policy decision.
Spot gold was up 0.3% at $1,786.28 per ounce by 0647 GMT. U.S. gold futures were up 0.3% at $1,796.90.
The dollar index was down 0.2%, making greenback-priced bullion more appealing to buyers holding other currencies.
The U.S. consumer price index (CPI) data for November is due at 1330 GMT.
“Market watchers will be digesting the CPI data to gauge whether a hawkish recalibration of rate expectations is warranted ahead of the FOMC meeting,” said IG Market strategist Yeap Jun Rong.
“Gold bulls may also attempt to tap on the disinflation narrative for a move higher.”
The Fed is widely expected to hike interest rates by 50 basis points (bps) at its final meeting of this year on Dec. 13-14.
“The Fed is expected to slow the pace of interest rate hikes, although officials have said they are likely to remain restrictive for some time. A weak inflation print could see that period become shorter than expected,” ANZ said in a note.
Lower rates tend to be beneficial for bullion as it decreases the opportunity cost of holding the non-yielding asset.
Goldman Sachs expects gold, with its real demand drivers, to outperform the highly volatile bitcoin in the long term, the bank wrote in a note on Monday.
“Spot gold may retest a support at $1,780 per ounce,” Reuters technical analyst Wang Tao said.
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Spot silver rose 0.8% to $23.49, platinum was down 0.1% at $1,000.49 and palladium ticked up 0.5% at $1,897.50.
(Reporting by Ashitha Shivaprasad in Bengaluru; editing by Uttaresh.V, Rashmi Aich and Vinay Dwivedi)
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