Gold prices fell slightly in Asian trade on Tuesday, but remained close to recent peaks as traders awaited key U.S. inflation data for more cues on the Federal Reserve’s plans to begin cutting interest rates. Spot gold came within spitting distance of a record high on Friday, but then pulled back as the dollar advanced of this week’s inflation reading.
Gold futures expiring in December fell 0.1% to $2,531.0 an ounce. Focus this week is squarely on consumer price index inflation data, due on Wednesday, for more cues on the U.S. economy.
Any signs of cooling inflation will likely spur increased bets on lower interest rates in the coming months, a scenario that bodes well for gold. Wednesday’s inflation reading comes just a week before a Federal Reserve meeting, where the central bank is widely expected to cut interest rates by 25 basis points.
Expectations of the September cut were also a key driver of gold’s recent gains, given that the cut is likely to kick off a Fed easing cycle. Lower rates bode well for gold, reducing the opportunity cost of investing in the yellow metal.
