BENGALURU: Gold prices firmed on Tuesday as investors awaited the crucial inflation report this week, which can significantly influence the outlook on US interest rates. Spot gold was up 0.4% at $2,345.39 2 per ounce by 1209 GMT, after dropping 1% on Monday. US gold futures rose 0.4% to $2,351.20.
“Gold’s relatively flat performance today shows that markets remain on tenterhooks and aren’t willing to take an outsized view of how the incoming US data will pan out,” said Han Tan, chief market analyst at Exinity Group. Investors are now looking forward to the US consumer price index report due on Wednesday.
The Federal Reserve Bank of New York said in its latest Survey of Consumer Expectations that respondents project inflation a year from now at 3.3% from March’s 3%, while inflation three years from now is seen moderating to an expected 2.8% rise from the prior month’s 2.9%. Traders expect the US central bank to start easing its cycle in September. Lower interest rates reduce the opportunity cost of holding non-yielding gold.
“Signs of easing price pressures may further bolster hopes for Fed rate cuts in 2024, which could give gold fresh impetus to return closer to its record high,” Tan added. Spot silver rose 0.7% to $28.39 per ounce and palladium gained 1.1% to $1,007.35. Platinum was up 0.9% at $969.25, after hitting a near one-year peak of $1,016.40 on Monday.
“We expect platinum to outperform on rising autocatalyst demand, greater potential for investment inflow and capex tightening in the South Africa PGM mining industry which could disproportionately impact platinum supply,” Deutsche Bank said in a note. Meanwhile, Anglo American is poised to potentially break up its operations by demerging or selling its steelmaking coal, nickel, diamonds and platinum businesses to fend off a takeover bid from the world’s largest miner BHP Group.
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