Gold muted amid USD strength, inflation uncertainty

Precious metal waits on key U.S. data for rate hike cues.

Gold muted amid USD strength, inflation uncertainty
Gold News (XAU/USD)

Gold prices (XAU/USD) traded sideways on Tuesday, as the U.S. dollar's resilience and anticipation of crucial inflation data clouded the outlook for the precious metal. Spot gold hovered around $2,169.70 an ounce by 07:00 GMT.

The yellow metal retreated from record highs last week as traders flocked to the greenback after major central banks adopted a dovish stance.

Investors are now eyeing the Personal Consumption Expenditures (PCE) price index data, the Federal Reserve's preferred inflation gauge, scheduled for release on Friday. The reading is expected to influence the Fed's interest rate trajectory.

Gold could face near-term headwinds, especially if sticky inflation figures delay the central bank's plans to cut rates this year. Last week, the Fed signaled its intention to trim rates by 75 basis points in 2024, contingent on inflation's path.

Atlanta Fed President Raphael Bostic reiterated his expectation for one rate cut this year on Monday, adding that the central bank can afford patience as long as the economy holds up.

Technically, a close below $2,145 could trigger a move lower, with the first support level seen around $2,080. Higher-for-longer interest rate signals from top Fed officials, including Chair Jerome Powell and FOMC member Mary Daly, who are due to speak later this week, will certainly weigh on gold prices.

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