By Arundhati Sarkar
(Reuters) – Gold priced edged higher on Tuesday as the dollar softened, although prices moved in a tight range as traders awaited U.S. inflation data later in the day and the Federal Reserve’s highly-anticipated policy decision on Wednesday.
Spot gold rose 0.2% to $1,960.59 per ounce by 0426 GMT. U.S. gold futures advanced 0.3% to $1,974.60.
The U.S. dollar eased 0.2%, making greenback-priced bullion more appealing to overseas buyers.
“The market is waiting for the U.S. Consumer Price Index (CPI) and Federal Reserve Monetary Policy Committee (FOMC) meeting to provide a clearer direction on gold price. (However) there is a lack of catalyst for gold to outperform other asset classes regardless of U.S. Fed policy decision making,” said Michael Langford, director at corporate advisory firm AirGuide.
The CPI for May is expected to show a slowing rise in inflation on a year-over-year basis to 4.1% from the April reading of 4.9%, according to economists polled by Reuters, with a monthly increase of 0.2%, down from a 0.4% rise the prior month.
While gold is seen as a hedge against inflation, higher rates to tame price pressures generally weigh on the non-yielding asset’s appeal.
Traders are pricing in a roughly 81% chance of the Fed keeping rates on hold, and a 19% chance of a 25-basis-point rate hike, according to the CME FedWatch tool.
“Gold should keep trending sideways towards the 100-day moving average of $1,941/oz, if this breaks the next support level is the 200-day moving average of $1,841/oz,” AirGuide’s Langford added.
The European Central Bank will deliver its rate decision on Thursday and is widely expected to raise rates by 25 basis points. But the Bank of Japan, which will announce its verdict on Friday, is expected to maintain its ultra-loose policy.
Among other precious metals, spot silver rose 0.4% to $24.1395 per ounce, platinum climbed 0.5% to $994.47, and palladium advanced 0.9% to $1,361.62.
(Reporting by Arundhati Sarkar in Bengaluru; Editing by Sherry Jacob-Phillips and Sohini Goswami)
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