Gold prices witnessed a retreat in Asian trade on Tuesday, stepping back from recent record highs as traders opted to secure profits ahead of the eagerly awaited U.S. inflation data. The surge in gold prices to new record levels earlier in March, nearing the $2,200 per ounce mark, was driven by increasing expectations of interest rate cuts, coupled with heightened demand for safe-haven assets.
Spot gold experienced a 0.2% decline to $2,178.43 per ounce, while gold futures expiring in April fell 0.2% to $2,184.65 per ounce by 01:24 ET (05:24 GMT). Both instruments were trading approximately $15 below the peak levels reached last week.
Investor focus now turns to the crucial U.S. Consumer Price Index (CPI) data scheduled for release later on Tuesday, which is anticipated to provide insights into the potential trajectory of interest rates. Analysts expect the inflation reading for February to reflect persistent inflation levels, remaining well above the Federal Reserve’s 2% annual target.
The significance of the inflation data has been underscored by recent remarks from various Fed officials, including Fed Chair Jerome Powell, emphasizing that the timing and extent of any rate adjustments this year will closely correlate with inflation trends. The CPI data gains prominence following a series of mixed signals from the nonfarm payrolls data released last week.
Gold, a traditional hedge against inflation, is poised to benefit from significant interest rate reductions anticipated later this year. This expectation has been a key driver behind the recent rally in gold prices.
In tandem with gold, other precious metals experienced declines on Tuesday after enjoying notable gains in recent sessions. Platinum futures fell by 0.5% to $938.0 per ounce, while silver futures registered a 0.1% decline to $24.685 per ounce. Market participants are keenly awaiting the inflation data for clearer cues on the potential trajectory of interest rates, shaping the near-term direction of precious metal markets.
