By Sherin Elizabeth Varghese
(Reuters) – Gold prices fell on Monday, retracing from a two-week high hit in the previous session, as investors positioned for key U.S. inflation reports that could shed light on the timing of the Federal Reserve’s first rate cut.
Spot gold was down 0.5% at $2,348.45 per ounce by 0753 GMT. U.S. gold futures fell 0.9% to $2,354. Prices hit its highest since April 22 on Friday.
The U.S. producer price index (PPI) data is scheduled for release on Tuesday, followed by the consumer price index (CPI) on Wednesday.
Median forecasts are for core consumer prices to rise 0.3% in the month, compared with 0.4% in March, pulling the annual rate down to 3.6%, according to a Reuters poll.
“Gold prices are retracing from last week’s high, but I expect dip buyers are simply looking for an opportunity to reload at more favourable prices,” said City Index senior analyst Matt Simpson.
“Inflation just won’t disinflate as quickly as doves hope. And that could result in some choppy trade for gold prices around these highs, at a time of year usually associated with negative returns for gold prices.”
After a softer-than-expected U.S. payrolls report for April and a weak jobs report last week, expectations have increased for rate reductions this year.
Traders expect the U.S. central bank to start its easing cycle in September. Lower interest rates reduce the opportunity cost of holding gold.
But comments by Fed officials last week were varied as speakers debated whether interest rates were high enough. A jump in consumers’ inflation expectations, revealed in a survey on Friday, could further complicate the conversation.
According to Reuters technical analyst Wang Tao, spot gold may test support at $2,351 per ounce, following its failure to break resistance at $2,377. [ TECH/C]
Spot silver was unchanged at $28.15 per ounce, platinum was up 0.4% to $998.30 and palladium rose 0.4% at $981.17.
(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Sherry Jacob-Phillips and Mrigank Dhaniwala)
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