Gold slightly up as investors watch for US inflation data

Bengaluru — Gold prices edged up on Tuesday helped by a softer dollar, though prices moved in a tight range as investors maintained caution ahead of US inflation data and the Federal Reserve’s policy decision.

Spot gold gained 0.3% to $1,785.78 an ounce by 3.02am GMT. US gold futures were up 0.3% at $1,796.50.

The dollar index was down 0.2%. A weaker dollar makes bullion more appealing to buyers holding other currencies.

Focus now shifts to the US consumer price index (CPI) data for November due at 1.30pm GMT.

“Market watchers will be digesting the CPI data to gauge whether a hawkish recalibration of rate expectations is warranted ahead of the Fed meeting,” IG Market strategist Yeap Jun Rong said. “Gold bulls may also attempt to tap on the disinflation narrative for a move higher.”

The US central bank is widely expected to hike interest rates by 50 basis points at its final meeting of this year scheduled for Tuesday and Wednesday.

“The Fed is expected to slow the pace of interest rate hikes, though officials have said they are likely to remain restrictive for some time. A weak inflation print could see that period become shorter than expected,” ANZ said in a note.

Lower rates tend to be beneficial for bullion as it decreases the opportunity cost of holding the non-yielding asset.

Seizures of smuggled gold in India reached a three-year high this year after the government raised the import duty on the precious metal and international flights resumed following Covid-19 curbs.

Goldman Sachs expects gold, with its real demand drivers, to outperform the volatile bitcoin in the long term, the bank wrote in a Monday research note.

Spot silver rose 0.6% to $23.44, platinum was up 0.4% to $1,005.88 and palladium ticked 0.1% higher to $1,889.50. 

Reuters