(Technical Analysis) Gold Prices Steady as Investors Await Key U.S. Inflation Data

Gold prices remained steady on Monday, as investors awaited U.S. inflation data due this week, which is expected to influence their predictions on the extent of a potential reduction in the Federal Reserve’s interest rates.

Spot gold held firm at $2,497.25 per ounce as of 0305 GMT, while U.S. gold futures saw a slight increase of 0.1%, rising to $2,526.10 per ounce.

“Gold has been content to hover near the $2,500 mark ahead of the key risk event this week in the form of the U.S. Consumer Price Index (CPI). Should the data fall below expectations, a stronger case for gold is likely to emerge,” said Tim Waterer, Chief Market Analyst at KCM Trade. “Support in the $2,470-$2,480 range has thus far limited gold’s downside, so this will be a crucial level to monitor should the metal face selling pressure.”

A low-interest-rate environment typically enhances the appeal of non-yielding assets such as bullion. According to the CME FedWatch Tool, traders of Fed funds futures are currently pricing in a 69% likelihood of a 25-basis-point cut at the Federal Reserve’s 17-18 September meeting, and a 31% probability of a 50-basis-point reduction.

On Friday, data revealed that U.S. employment grew less than anticipated in August. However, a decrease in the unemployment rate to 4.2% indicated that the labour market had not weakened enough to justify a half-point rate cut.

In the meantime, China’s central bank refrained from purchasing gold for its reserves for the fourth consecutive month in August, according to official data released on Saturday.

As a key consumer of metals, China’s consumer prices accelerated in August, while deflation in producer prices worsened, as Beijing continued its efforts to stimulate domestic demand.

Elsewhere in the precious metals market, spot silver edged up by 0.3% to $27.99 per ounce, platinum increased by 1% to $930.75, and palladium rose by 0.7%, trading at $916.90 per ounce.