By Ashitha Shivaprasad
(Reuters) – Gold prices were confined to a narrow range on Wednesday as market participants assessed the timeline for potential U.S. interest rate cuts and were on the lookout for fresh cues for further clarity on monetary policy.
Spot gold rose 0.1% at $2,317.44 per ounce as of 0444 GMT. U.S. gold futures gained 0.1% to $2,326.40.
The University of Michigan’s consumer sentiment reading on Friday and comments from a slew of Federal Reserve officials are on investors’ radar. The U.S. consumer price index data is due on May 15.
“The Fed is worried about inflation, but isn’t going to hike rates more and still wants to cut if it gets a chance – this is the story. Not much will happen to the story until we get CPI next week,” Ilya Spivak, head of global macro at Tastylive, said.
If the upcoming reports show “scary inflation”, then the Fed cannot cut rates and it will pressure gold, Spivak added.
Higher rates reduce the appeal of holding non-yielding bullion.
Minneapolis Fed President Neel Kashkari said on Tuesday that stalled inflation buoyed in part by housing market strength means the U.S. central bank may need to hold rates steady all year.
Markets are currently seeing a 65% chance of a U.S. rate cut in September, as per CME’s FedWatch Tool.
“I would say, keep watching China because it is a wild card here,” Spivak said.
China’s central bank added 60,000 troy ounces of bullion to its reserves in April, official data showed on Tuesday, extending the period of consecutive purchases to 18 months.
According to Reuters technical analyst Wang Tao, spot gold may retest resistance at $2,325, a break above which could open the way towards the $2,336-$2,351 range.
Spot silver firmed 0.3% to $27.36 per ounce.
Platinum dipped 0.1% to $975.48 and palladium rose 0.4% to $974.93.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Sherry Jacob-Phillips, Varun H K and Eileen Soreng)
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