Gold Takes a Pause While Traders Prepare for Inflation Data Release

Gold maintained stability on Monday, pausing its upward momentum after a strong rally last week, as traders awaited U.S. inflation data to gain insight into the Federal Reserve’s potential interest rate adjustments.

At 9:32 a.m. ET (1332 GMT), spot gold remained stable at $2,179.69 per ounce, following a record high of $2,194.99 reached on Friday, driven by increased speculation of a rate cut due to positive U.S. labour market data. Similarly, U.S. gold futures showed minimal movement, holding at $2,186.20.

Upcoming Release: February’s U.S. Consumer Price Inflation (CPI) Data Scheduled for Tuesday
Jim Wyckoff, senior analyst at Kitco Metals, suggests that the current fluctuations in gold are likely just a temporary pause as market traders await the CPI data release on Tuesday.
He notes that if the upcoming data surpasses last month’s report significantly, it could pose some challenges for the gold market, potentially leading to short-term selling pressure.

However, Wyckoff believes that it’s highly probable that gold will reach new highs in the near future. Additionally, traders are currently factoring in a probability of more than 70% for an interest rate cut by June, as indicated by the CME FedWatch tool.

Indeed, low interest rates reduce the opportunity cost of holding gold, as it doesn’t yield interest like other assets. Central bank buying also adds support to gold prices. The increase in net long positions by COMEX gold speculators indicates bullish sentiment towards gold in the market.

It seems like precious metals had a mixed day. Silver rose by 0.5% to $24.43 per ounce, platinum gained 2.2% to $932.80 per ounce, and palladium added 1.6% to $1,035.65 per ounce.

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