Gold subdued as traders gear up for US inflation print

Jan 10 – Gold prices eased on Wednesday ahead of US inflation data that could shape the Federal Reserve’s outlook on interest rate cuts this year, although a softer dollar kept a floor under prices.

Spot gold was down 0.4% at USD 2,021.39 per ounce by 2:25 p.m. ET (1925 GMT). US gold futures settled 0.3% lower at USD 2027.8.

Cooler-than-expected inflation data will give the Fed more reason to cut rates this year, which should move gold prices higher, said Bob Haberkorn, senior market strategist at RJO Futures, adding that he expected “a quiet session with a little bit of back and forth.”

US consumer inflation data is due on Thursday. Economists polled by Reuters see year-on-year inflation at 3.2% in December, but think core inflation likely fell to 3.8%, its lowest since mid-2021.

A New York Federal Reserve report revealed that consumers expect a decline in inflation, while Fed Governor Michelle Bowman on Monday stated that the US central bank’s monetary policy seems “sufficiently restrictive”.

Benchmark 10-year US Treasury yields ticked up, denting bullion’s appeal. Higher interest rates raise the opportunity cost of investing in non-yielding bullion.

“If markets have to dilute bets for a March rate cut, spot gold may see a brief stint back in the sub-USD 2k domain,” said Han Tan, chief market analyst at Exinity Group.

“Still, bullion bulls would have no qualms restoring spot gold back above that psychologically important mark once markets get a firmer grasp on the Fed’s policy pivot.”

The dollar index ticked down about 0.2%, making greenback-priced bullion more affordable for buyers holding other currencies.

In other metals, spot silver fell 0.3% to USD 22.91 per ounce, set for its third consecutive session of declines.

Platinum lost 1.3% to a near one-month low of USD 917.55, while palladium rose 1.8% to USD 995.69, snapping an 11-sesion losing streak.

(Reporting by Anushree Mukherjee and Sherin Elizabeth Varghese in Bengaluru; Editing by Jan Harvey, Emelia Sithole-Matarise, and Shailesh Kuber)