Gold prices remained within a tight range in Asian trading on Thursday as traders adopted a cautious stance ahead of crucial U.S. inflation data that is poised to influence interest rate expectations.
The yellow metal faced downward pressure due to comments from Federal Reserve officials, who emphasized the need for additional efforts to combat inflation. This echoed a consistent message from officials indicating that the Fed was not rushing to initiate early interest rate cuts.
Persistent concerns about the prospect of prolonged higher interest rates have kept gold trading within the $2,000 to $2,050 per ounce range for nearly two months. Traders are cautious due to the potential increase in the opportunity cost associated with investing in gold in such an environment.
Spot gold steadied at $2,035.26 per ounce, while gold futures expiring in April remained flat at $2,043.45 per ounce as of 00:38 ET (05:38 GMT).
The focus is now on the Personal Consumption Expenditure (PCE) price index data, the Fed’s preferred inflation measure, scheduled for later in the day. This reading is expected to reinforce the notion that U.S. inflation remains persistent, particularly after a higher-than-anticipated consumer inflation reading in January.
The recent comments from Fed officials, including John Williams and Raphael Bostic, underlined the central bank’s commitment to addressing inflation. Such statements cast doubts on expectations of early rate cuts in 2024, leading traders to reevaluate the probability of a rate cut in June, which is currently priced at 52.6%, according to the CME Fedwatch tool.
If interest rates remain higher for an extended period, the U.S. dollar is likely to strengthen, putting additional pressure on gold and other precious metals. Platinum futures rose 0.5% to $888.40 per ounce, while silver futures increased by 0.3% to $22.705 per ounce. Despite these minor gains, both metals incurred losses of 2% to 5% in February, while gold is set to conclude the month without significant changes.
