Gold prices experienced slight losses on Tuesday, with the commodity unable to fully build on the previous day’s gains. Investors seem cautious ahead of critical US inflation data set to be released this week. As a result, the precious metal remains under pressure, though it stays above the key psychological level of $2,500.
US Dollar Strength and Rate Cut Expectations
The US Dollar (USD) has regained strength, approaching recent highs as market participants have dialed back expectations for a significant Federal Reserve (Fed) rate cut. This has dampened the appeal of gold as a safe-haven asset, especially with stability across global equity markets. Gold’s recent moves reflect the uncertainty about the Fed’s monetary policy direction, which will be influenced by upcoming inflation data.
Key US Inflation Data in Focus
The primary driver of market sentiment this week is the upcoming US Consumer Price Index (CPI) report, which is scheduled for release on Wednesday. This will be followed by the Producer Price Index (PPI) on Thursday. These inflation figures are expected to play a pivotal role in shaping expectations for the Fed’s interest rate decisions in the coming weeks. A clearer picture will likely emerge following these releases, potentially giving gold prices a more defined direction.
Traders Awaiting Breakout as Gold Holds Familiar Range
Despite the recent fluctuations, gold prices have remained within a narrow range over the past three weeks. This indicates indecision among traders, with many waiting for a breakout from this range before making significant moves. The technical setup suggests that a strong directional push could occur if either the $2,500 support or the upper resistance levels are breached.
Short-Term Technical Outlook
For now, gold’s short-term trajectory appears uncertain. While the commodity has managed to stay above the $2,500 mark, it is evident that traders are awaiting further clarity from the Fed’s upcoming moves. Any strong selling pressure below this level could signal an extended decline, but the lack of follow-through on either side highlights the cautious mood in the market.
Conclusion
In summary, gold prices are largely range-bound as investors await key US inflation data later this week. The US Dollar’s recent strength and reduced expectations of a large Fed rate cut have kept gold’s gains in check. With CPI and PPI data on the horizon, the precious metal is poised for a more significant move, depending on the market’s interpretation of inflation trends and Fed policy expectations.
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