New Delhi

Gold prices stalled Thursday, after touching a two-week low in the previous session. Investors eye US inflation data for signs of cooling that could spur the Federal Reserve to slash interest rates.

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It last stood firm at $2,299.55 per ounce as of 0255 GMT, following a drop in the previous session to its weakest since June 10. US gold futures fell 0.1 per cent to $2,310.20.

The dollar was near an eight-week high, making gold more expensive for holders of other currencies, while benchmark 10-year yields also held firm.

"The ascent by the US dollar accompanied by rising bond yields have left the gold price swimming against the tide," said Tim Waterer, chief market analyst at KCM Trade.

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Fed Governor Michelle Bowman said Wednesday she still believes inflation will continue to ease with policy rate held steady, but added that lower interest rates would be "eventually" appropriate if inflation trends toward the 2 per cent target.

Key economic data due this week includes the US first-quarter gross domestic product estimates are due at 12:30 GMT and personal consumption expenditures (PCE) inflation data on Friday. 

"If the core PCE print leaves financial markets pessimistic about when that first Fed interest rate cut may occur, gold could slip back towards $2,270 level," Waterer added.

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Though gold is usually considered a hedge against inflation, higher interest rates increase the opportunity cost of holding the non-yielding asset.

The tension was underlined in a note from BMI analysts recently: "Gold prices remain tangled in a tug of war between a less dovish Fed and high levels of geopolitical tension."

"The main driver of easing gold prices in the longer term will be greater risk-on sentiment as the global economy recovers in the later part of the decade."

Other precious metals moved lower, with spot silver down 0.1 per cent at $28.74. Platinum eased 0.3 per cent to $1,007.33 while palladium gained 0.2 per cent to $930.39.

With the coming critical data related to the economy, gold price will be highly sensitive to deviations in both inflation expectations and Federal Reserve policy outlooks. Investors are keenly watching for these developments to track what the future holds for gold and other metals together.