Gold in tight range as investors brace for US inflation data

Oct 13 (Reuters) – Gold prices flitted in a tight range on Thursday as market participants maintained a cautious stance ahead of a key US inflation reading that could influence the size of the Federal Reserve’s next interest rate hike.

Spot gold fell 0.2% to USD 1,668.59 per ounce, as of 0646 GMT. US gold futures dipped 0.2% to USD 1,674.80.

Although traditionally considered an inflation hedge, interest rate hikes to combat soaring prices have reduced bullion’s appeal since it yields no interest.

“Inflation is going to remain very sticky for a while and will keep gold under pressure … In the near-term, trading range for gold prices will be USD 1,620 to USD 1,740” said Edward Meir, an analyst with ED&F Man Capital Markets.

The US Consumer Price Index data is due at 1230 GMT and is forecast to come in at a hot 8.1% year-on-year in September, which could cement expectations of another big rate hike from the Fed.

A stronger print would be negative for gold, ANZ wrote in a note.

Wednesday’s readout of the Fed’s last policy meeting showed policymakers agreed they needed to move to a more restrictive policy stance, and then maintain that for some time to lower inflation.

Gold still looks weak on the charts and any rally in prices will be short-term as the Fed is still concerned about inflation and remains very hawkish, Meir added.

Market participants also took stock of new COVID-19 infections reported from top gold consumer China, which imposed restrictions in some regions.

Spot silver fell 0.5% to USD 18.97 per ounce.

“We expect silver prices to fall to USD 17 – USD 18/oz over the next six months before rising to USD 22 as the Fed returns to rate cuts and quantitative easing and as China eventually strengthens,” Citi said in a note.

Platinum lost 0.6% to USD 875.12 and palladium was flat USD 2,136.41.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)