Gold subdued as traders ready for US inflation data

Gold inched lower on Monday as the market focus shifted to U.S. inflation data due this week which could influence the timeline of Federal Reserve interest rate cuts.

Spot gold edged 0.5% to $2,025.91 ounce. U.S. gold futures dropped 0.6% to $2,036.60.

The U.S. personal consumption expenditure (PCE) price index, the Fed’s preferred measure of inflation, is due on Thursday, with a 0.4% rise forecast on a monthly basis.

“If the PCE data comes a little warmer then it will be bearish for the metals, but gold will maintain the $2,000 range. For it to push below that, economic data this week has to be surprisingly hot,” said Jim Wyckoff, senior analyst at Kitco Metal.

The gold and silver markets are seeing some technicals-based selling pressure due to the lack of fresh fundamental news and are awaiting fresh data points, Wyckoff added.

Recent remarks from Fed officials suggested the U.S. central bank was in no rush to cut rates, largely cementing bets against any cuts before June. Higher interest rates diminish the appeal of non-yielding bullion.

But while a weaker inflation reading will not change things for the March meeting, it “could at least encourage a more serious debate within the Fed around the timing of the first cut, which could be positive for gold,” said Craig Erlam, senior markets analyst at OANDA.

Spot silver lost 1.8% to $22.52 per ounce, while palladium fell 2.6% to $945.65.

Platinum shed 2.3% to $879.60.

“While we expect CTA (Commodity Trade Advisors) selling activity this session to weigh on the metal (platinum), every single trend indicator on our radar is already pointing to the downside, suggesting that trend following algos are now running out of dry-powder to sell,” TD Securities wrote in a note.