Gold prices saw an upward trajectory in Asian trade on Monday, building on a recovery from one-month lows experienced after breaking below a crucial support level. The recent dip below $2,000 an ounce in February, triggered by robust U.S. inflation readings, led traders to reassess the likelihood of early interest rate cuts by the Federal Reserve.
Although gold has bounced back above the support level in the last two sessions, it remains within a relatively narrow trading range of $2,000 to $2,050 an ounce, established since mid-January. The precious metal faces challenges amid persistent U.S. inflation and a hawkish outlook for interest rates.
As of 00:37 ET (05:37 GMT), spot gold showed a 0.3% increase, reaching $2,019.95 an ounce, while gold futures expiring in April rose by 0.4% to $2,031.15 an ounce.
The strength of the U.S. dollar, hovering near a three-month high after better-than-expected producer price index inflation data on Friday, weighed on gold. The data followed a similarly robust consumer price index reading for January. The Federal Reserve, having downplayed expectations of early rate cuts during its end-January meeting, will be closely watched for more insights on interest rates in the upcoming minutes.
Gold’s struggle is further compounded by the notion of higher-for-longer rates, which increases the opportunity cost of investing in the precious metal. This sentiment spilled over to other precious metals, with platinum futures declining by 0.3%, and silver futures experiencing a 1.3% fall. The focus now turns to the minutes of the Fed‘s January meeting for additional signals on the trajectory of interest rates.
