By Brijesh Patel
(Reuters) – Gold prices edged lower on Tuesday as investors awaited more U.S. economic data this week that could shed light on the Federal Reserve’s interest rate outlook.
Spot gold was down 0.1% at $2,025.20 per ounce, as of 0741 GMT – trading in a narrow $8 range in the session so far. U.S. gold futures eased 0.1% to $2,039.30.
“Things are slowing down for the end of the year, but one thing to keep in mind will continue to be the outlook on Fed policy,” said Ilya Spivak, head of global macro at Tastylive.
“Expectations are quite substantial at this point for rate cuts next year. It needs to be seen whether the market still has room to continue to move on that story in the near term.”
Fed Chair Jerome Powell said last week that the central bank’s monetary policy tightening is likely over, with a discussion of cuts in borrowing costs coming “into view.”
While some Fed officials have pushed back against surging market expectations of rate cuts, the remarks have done little to change investor sentiment.
Markets are still pricing in about a 69% chance of a rate cut in March, according to the CME FedWatch tool. Lower interest rates tend to support non-interest-bearing bullion.
Investors are awaiting a slew of U.S. economic data this week, including the November core personal consumption expenditure (PCE) index report, the Fed’s preferred measure of underlying inflation on Friday.
Elsewhere, the Bank of Japan maintained ultra-loose monetary settings as expected, underscoring policymakers’ preference to await more clues on whether wages will rise enough to keep inflation durably around its 2% target.
Spot gold may retest support of $2,019 per ounce, a break below which could open the way towards a range of $2,001 to $2,010, according to Reuters technical analyst Wang Tao. [TECH/C]
Spot silver gained 0.4% to $23.87 per ounce, while platinum fell 0.1% to $944.07 and palladium was down 0.6% at $1,177.27.
(Reporting by Brijesh Patel and Tina Parate in Bengaluru; Editing by Rashmi Aich, Subhranshu Sahu, Eileen Soreng and Varun H K)
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