Gold prices remain below $2,000 ahead of key U.S. data

Gold prices showed little movement during Asian trade today, with spot gold (XAU/USD) trading at $1,993.40 per ounce as of 07:40 GMT, up just $10 since yesterday. The precious metal remains below key support levels as higher U.S. interest rates continue to diminish its appeal as an investment.

Traders have lowered expectations for Fed cuts in May and June given officials’ warnings that rates will stay high if inflation is sticky. The CME Fedwatch tool shows growing uncertainty about the timing and magnitude of rate cuts. Higher rates raise the opportunity cost of zero-yield bullion.

The metal found some relief in a consolidating U.S. dollar following its rally to 3-month highs this week. But further dollar gains are expected as the Fed’s data-dependent stance limits hopes for early rate cuts.

U.S. retail sales, and jobless claims figures due later today may guide the rate path outlook. Producer price inflation data lands on Friday. Additionally, Fed members Waller, Daly and others are slated to comment this week.

Sharp Fed hikes over the past two years have kept a lid on major gold gains despite mounting economic troubles globally. This headwind is seen persisting in the near future.