By Arundhati Sarkar
(Reuters) – Gold prices stalled near the previous session’s one-month peak on Wednesday as investors held off on big bets ahead of U.S. inflation data later this week that could steer the Federal Reserve’s rate hike strategy.
Spot gold was little changed at $1,712.87 per ounce by 0900 GMT, while U.S. gold futures were flat at $1,715.60.
Bullion prices rose more than 2% to breach the key $1,700 level on Tuesday.
Considering Tuesday’s rally was mostly short-term traders covering short positions on the dollar’s retreat, there’s a natural lack of follow-through as such a move is unlikely to trigger any activity in the physical market, said Julius Baer analyst Carsten Menke.
The dollar index eased slightly on the day, making gold an attractive bet for overseas investors. [USD/]
The inflation data is due on Thursday.
As the CPI at the moment is the single most important data point, a softer-than-expected reading will raise hopes of the Fed slowing its monetary tightening trend, which could weigh on the dollar and lift gold, Menke added.
While gold is seen as a hedge against inflation, higher interest rates also make other assets more attractive compared with non-interest-bearing bullion.
Economists expect a deceleration in both the monthly and yearly core consumer price index to 0.5% and 6.5%, respectively, according to a Reuters poll.
“Prices seem to be consolidating ahead of CPI. If the U.S. CPI print is hotter than expected, prices could move below $1,690 and if not gold might break the $1,725 level,” said Stephen Innes, managing partner at SPI Asset Management.
Traders also kept a close tab on COVID-related developments in top bullion consumer China, with the city of Guangzhou grappling with a spike in cases.
Spot silver rose 0.5% to $21.4491 per ounce, platinum edged 0.1% higher to $998.51.
Palladium added 0.9% to $1,937.75.
(Reporting by Arundhati Sarkar and Ashitha Shivaprasad in Bengaluru;Editing by Elaine Hardcastle)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.