BENGALURU: Gold prices languished near a two-month trough on Thursday as traders lowered expectations of sooner and deeper rate cuts by the Federal Reserve this year, while markets await a slew of US economic data for further clarity.

Spot gold was up 0.3% at $1,997.10 per ounce, as of 1158 GMT, but hovered near its lowest since Dec. 13 hit on Wednesday. US gold futures rose 0.3% to $2,009.20.

The dollar index slipped 0.1%, making bullion cheaper for other currency holders. “The (US) inflation data this week was the story that broke the camel’s back and tipped gold prices below the $2,000 range,” said Craig Erlam, senior markets analyst at OANDA.

Data on Tuesday showed an unexpected spike in US consumer prices, which caused bullion to fall 1.4% on Tuesday. Fed policymakers will probably wait until June before cutting rates, traders bet after the CPI data.

Higher interest rates increase the opportunity cost of holding bullion. Fed Vice Chair for Supervision Michael Barr on Wednesday said the path back to 2% inflation “may be a bumpy one”. Meanwhile, Chicago Fed President Austan Goolsbee cautioned against delaying rate cuts for too long.

All the negative factors are already priced in, so not expecting further sharp downward move for gold, said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.

The focus is now on US retail sales and initial jobless claims data, due at 1330 GMT, and the producer price index numbers, due on Friday. At least three more Fed officials are scheduled to speak later this week.

If retail sales data shows signs that the US economy is cooling, then that could be ultimately beneficial for gold, OANDA’s Erlam said. Palladium gained 2.4% to $956.81 an ounce.

It surged over 8% on Wednesday on short-covering, reclaiming its premium over platinum. Spot platinum climbed 1% to $897.95 and silver rose 1.2% to $22.64.