Spot gold edged down by 0.2% to $2,492.54 per ounce and U.S. gold futures declined 0.1% to $2,526.10
Gold prices dropped on Monday, as investors awaited U.S. inflation report due this week to strengthen their bets on the size of a likely reduction in Fed’s interest rates.
Spot gold edged down by 0.2% to $2,492.54 per ounce, as of 0541 GMT. U.S. gold futures declined 0.1% to $2,526.10.
Major data points this week include the August U.S. CPI due on Wednesday, followed by PPI on Thursday.
Gold has been content to just drift within an earshot of the $2,500 level ahead of key event risk in the form of consumer price index on deck this week and if that comes in below expectations, a stronger story will play out for gold, according to Tim Waterer, chief market analyst, KCM Trade.
Support in the $2,470-$2,480 range has limited downside moves for gold, so this will be a key area to watch in case gold comes under selling pressures, he said.
A low interest rate environment tends to boost non-yielding bullion’s appeal.
Fed funds futures traders are now pricing a 71% possibility of a 25 bp cut at the Fed’s September 17-18 meeting, and a 29% possibility of a 50 bp cut, shows the CME FedWatch Tool.
Data on Friday showed that U.S. employment rose less than expected in August, but a drop in the jobless rate to 4.2% suggested the labour market was not falling off the cliff to warrant a half-point rate cut.
Meanwhile, China’s central bank held back on buying gold for its reserves for a fourth consecutive month in August, official data showed on Saturday.
Key metals consumer China’s consumer prices rose in August, while producer price deflation worsened, as Beijing maintained efforts to reinvigorate domestic demand.
