By Rahul Paswan
(Reuters) – Gold prices held steady on Monday, off recent record highs as the market anticipated a smaller interest rate cut by the U.S. Federal Reserve next month, while traders awaited inflation data this week for further clues on policy easing.
Spot gold was around $2,651.48 per ounce by 0940 GMT, off a record peak of $2,685.42 hit on Sept. 26. U.S. gold futures edged up about 0.2% at $2,671.70.
The market now awaits minutes of the Fed’s last policy meeting and data for the U.S. Consumer Price Index and Producer Price Index this week.
“This week’s CPI data is crucial for anticipating what the Fed would do, but I’m not expecting a surprise because the market is already pricing an almost 100% chance that the Fed will look at rate (cut) by only 25 basis points,” said Kinesis Money market analyst Carlo Alberto De Casa.
Traders now see a 95% probability that the Fed will cut rates by only a quarter of a percentage point next month, after a U.S. employment report pointed to a resilient economy that likely does not need the central bank to deliver large interest rate cuts for the rest of this year.
“The dollar recovering and going up wouldn’t be a good scenario for gold but despite that bullion has managed to remain steady, confirming a strong interest of investors for bullion. Apart from that, geopolitical tensions have also supported gold demand,” said De Casa.
Israel bombed targets in Lebanon and the Gaza Strip on Sunday ahead of the one-year anniversary of the Oct. 7 attacks that sparked its war.
“Geopolitical risks in the Middle East could support safe-haven flows for the yellow metal, which limit the downside from a less-dovish market rate pricing,” IG market strategist Yeap Jun Rong said.
Spot silver fell 0.9% to $31.89, platinum lost 0.3% at $984.65 and palladium rose 0.8% to $1,020.09.
(Reporting by Rahul Paswan and Ashitha Shivaprasad in Bengaluru; Editing by Shilpi Majumdar)
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