Gold rebounds as dollar softens, eyes on inflation data

Gold rebounds as dollar softens, closes in on record highs ahead of key inflation data release.

Gold rebounds as dollar softens, eyes on inflation data

Gold spot climbed 1.2% to $2,200 per ounce by 11:00 GMT on Tuesday, recouping losses from last week's retreat as the U.S. dollar weakened and Treasury yields eased. The yellow metal had temporarily lost its shine amid a risk-on sentiment after major central banks adopted a dovish stance.

Investors will now be closely watching the upcoming release of the Personal Consumption Expenditures (PCE) price index on Friday, the Federal Reserve's preferred inflation gauge. This key economic data could influence the central bank's interest rate trajectory, with elevated inflation potentially delaying anticipated rate cuts this year.

Analysts sceptical of Japanese action as USD/JPY approaches 152
Yen bears stay on guard as analysts doubt Japanese intervention at current levels.

Last week, the Fed signalled plans to trim rates by 75 basis points in 2024, contingent on taming inflation. However, Atlanta Fed President Raphael Bostic cautioned that the central bank can afford patience as long as the economy remains resilient.

Technically, gold faces potential headwinds if it closes below the $2,145 support level, with further downside targeting $2,080. Conversely, a decisive break above the all-time high of $2,200 could fuel fresh upside momentum. Hawkish signals from Fed officials, including Chair Jerome Powell and FOMC member Mary Daly, who are scheduled to speak later this week, may weigh on gold prices.

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