Shafaq News/ Gold prices edged lower on Tuesday as the dollar strengthened, while investors cautiously awaited U.S. economic data due later this week to gauge inflationary pressure and the Federal Reserve’s steer on monetary policy.
Spot gold was down 0.2% at $1,896.20 per ounce, as of 0643 GMT, while U.S. gold futures held steady at $1,898.70.
The dollar index strengthened 0.1% against its rivals, making gold more expensive for other currency holders.
“Inflation has been on the rise in recent weeks, and traders are awaiting confirmation from U.S. data this week on continuous strengthening in the price levels,” said Margaret Yang, a strategist at DailyFX, referring to the U.S. consumer price report due on Thursday.
“This (U.S. data) is expected to have a mixed effect on gold. On the positive side, gold is perceived as an inflation hedge, so the higher the number the more appealing gold will be,” Yang said, adding that more inflation would, however, raise concerns about Fed tapering.
A weaker-than-expected U.S. jobs report last week has quelled expectations of an early tapering in the Fed’s stimulus.
Also, on the radar, the European Central Bank is expected to hold its policy meeting on Thursday.
“Gold will struggle to maintain gains above $1,900 an ounce until the U.S. inflation data is out of the way,” Jeffrey Halley, OANDA senior market analyst, said in a note.
“I expect gold to jump around in a choppy $1,860 to $1,900 range this week, with last week’s high at $1,917 an ounce unlikely to be retested this week.”
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.6% to 1,037.33 tons on Monday from 1,043.16 tons on Friday.
Among other precious metals, silver fell 0.5% to $27.75 per ounce, palladium was mostly unchanged at $2,834.27, while platinum slipped 0.5% to $1,167.21.
Shafaq News: Reuters