As investors keenly await reports and insights from Federal Reserve (Fed) officials, gold prices remained steady in Monday’s trading session. The price of spot gold hovered around $2,022.39 per ounce as of 03:40 GMT. On the other hand, U.S. gold futures held firm at $2,036.20 per ounce.
This stability also comes as the market sees thin trading induced by the Lunar New Year holiday.
Other precious metals posted mixed performances. Spot platinum dipped by 0.2 percent to $870.25 per ounce. Meanwhile, palladium experienced a 0.3 percent increase to $861.48. Silver also saw a modest rise of 0.3 percent, reaching $22.66 per ounce.
Eyes on economic reports
This week, market participants are focusing on several key economic reports from the U.S. that could impact gold prices. These include the Consumer Price Index (CPI), which is scheduled for release on Tuesday. Meanwhile, retail sales figures are set to be published on Thursday, and the Producer Price Index (PPI) is due out on Friday.
“Gold is remarkably resilient, given we’ve seen almost 60 basis points of cuts (for 2024) come out of the market since the January high. Positioning is neutral, and if the data deteriorates softening the dollar and deepening U.S. rate cut bets, then gold will shine again,” noted Kyle Rodda, an analyst at Capital.com.
He added, “The big risk this week is consumer price index (CPI)-if that comes in hot, another test of $2,000/Oz level could be on the cards.”
Financial markets are also closely monitoring remarks from Fed officials. Recently, Chairman Jerome Powell commented on requiring more evidence of inflation’s decline before considering rate cuts.
Read: Pros and cons: Guide to investing in gold in 2024
Speculative positioning
Amid these anticipations, the focus also shifts to the speculative positioning in the gold market. According to recent data, COMEX gold speculators increased their net long positions by 10,616 contracts to 82,591 in the week ending February 6.
Additionally, interest rate projections from the LSEG’s Interest Rate Probability app suggest that traders have nearly discounted the possibility of a rate cut at the Fed’s March meeting. There is about a 62 percent likelihood of a cut in May.
Meanwhile, other experts expect the Fed to cut rates starting in June. Manav Modi, analyst at Motilal Oswal Financial Services Ltd., shared, “The U.S. central bank is now expected to begin trimming rates only from June 2024, keeping market participants on edge and supporting an up-move in the dollar index.”
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