Spot gold was 0.5% lower at $2,348.45 per ounce, and U.S. gold futures declined 0.9% to $2,354
Gold prices dropped on Monday, pulling back from a two-week peak hit in the previous session, as investors positioned for key U.S. inflation figures that could shed light on the timing of the Federal Reserve’s first rate cut.
Spot gold was 0.5% lower at $2,348.45 per ounce by 0753 GMT. U.S. gold futures declined 0.9% to $2,354. Price touched its highest since April 22 on Friday.
The U.S. producer price index (PPI) data is to be released on Tuesday, followed by the consumer price index (CPI) on Wednesday.
Median forecasts are for core consumer prices to increase 0.3% in the month, compared with 0.4% in March, pulling the annual rate down to 3.6%, per a Reuters poll.
Gold prices are retracing from last week’s high, but I expect dip buyers are simply looking for an opportunity to reload at more favourable prices, according to City Index senior analyst Matt Simpson.
He added: Inflation just won’t disinflate as quickly as doves hope. And that could result in some choppy trade for gold prices around these highs, at a time of year usually associated with negative returns for gold prices.
After a softer-than-expected U.S. payrolls report for April and a weak jobs report last week, expectations have increased for rate cuts this year.
Traders expect the U.S. central bank to begin its easing cycle in September. Lower interest rates reduce the opportunity cost of holding gold.
But comments by Federal Reserve officials last week were varied as speakers debated whether interest rates were high enough. A jump in consumers’ inflation expectations, revealed in a survey on Friday, could further complicate the conversation.
