Spot gold dropped 0.3% at $2,342.80 per ounce after gaining nearly 1% on Monday
Gold prices edged down on Tuesday, while traders awaited key U.S. inflation data that could offer clues on how soon the Federal Reserve can reduce interest rates.
Spot gold dropped 0.3 per cent at $2,342.80 per ounce, as of 0732 GMT, after gaining nearly 1 per cent on Monday.
U.S. gold futures were 0.4 per cent higher to $2,343.80.
A very strong dollar picture supported by a change in the U.S. monetary policy stance where the Federal Reserve starts looking for evidence to start interest rate hikes instead of easing could be a major risk as we could see a further corrective move in spot gold, according to Kelvin Wong, a senior market analyst for Asia Pacific at OANDA.
However, in the short term, spot gold is still more tilted towards the positive side rather than the negative side and $2,310 is a key short-term support for this week, he said.
The core personal consumption expenditures price index (PCE), the Fed’s preferred inflation measure, is due on Friday.
Fed meeting minutes released last week showed that the policy response, for now, would involve maintaining the benchmark policy rate at its current level but also reflected discussions of possible further hikes.
Traders are pricing in around 63 per cent probability of interest rate cut by November, as per the CME FedWatch Tool.
Bullion is known as an inflation hedge, but higher rates increase the opportunity cost of holding non-yielding gold.
Spot gold may break the nearest resistance at $2,357 per ounce, and rise towards the $2,363-$2,373 range, Reuters technical analyst Wang Tao said.
