Gold prices paused their record-breaking rally on Monday, taking a break from the upward momentum driven by a cooling U.S. labor market and statements from the Federal Reserve. Traders eagerly awaited the release of a U.S. inflation report to gain fresh insights into the potential timing of interest rate cuts.
As of 06:02 GMT, spot gold remained unchanged at $2,177.24 per ounce, while U.S. gold futures dipped slightly by 0.1 percent to $2,183.90.
In Saudi Arabia, the price of 24-karat gold reached SAR3,063 on Monday. Additionally, 10 grams of 24-karat gold are being sold for SAR2,629 in the country, and the price per ounce of gold is SAR8,177.
Read more: Gold prices set for largest weekly jump in 5 months
On Friday, gold reached a new peak of $2,194.99 for the fourth consecutive day following indications of a cooling U.S. labor market.
According to City Index Senior Analyst Matt Simpson, it was observed that there has been a significant increase in net-long exposure by large speculators last Tuesday, indicating a strong demand for gold. Given this situation and the anticipation of Fed cuts, it would not be advisable to short the gold market for an extended period of time.
Data released on Friday showed that COMEX gold speculators raised their net long positions by 63,018 contracts to 131,060 in the week ending March 5.
CPI data crucial for gold prices
Simpson stated that prices would likely consolidate at these elevated levels in anticipation of consumer price inflation (CPI) data for February, which is scheduled to be released on Tuesday. He noted that this would be the primary driver influencing gold prices for the week, particularly since the Fed is currently in a blackout period. A lower reading on the CPI could strengthen the case for an early rate cut, providing support for gold prices. Fed Chair Powell expressed greater confidence in cutting rates in the upcoming months during his Congressional testimony last week.
Traders are currently factoring in the likelihood of three to four quarter-point (25 bps) rate cuts in the United States, with a 75 percent probability of the first cut occurring in June, according to LSEG’s interest rate probability app. Lower interest rates enhance the appeal of gold, which does not yield interest or dividends.
Meanwhile, spot platinum rose slightly by 0.1 percent to $913.16 per ounce, while palladium remained steady at $1,019.54, and silver saw minimal movement at $24.30.
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