Gold stays stable as US inflation data approaches

27 Feb 2024 , 10:32 AM

Tuesday’s gold prices remained stable as investors anticipated the release of a significant U.S. inflation report later this week, which may provide further insight into the timing of the Federal Reserve’s potential rate-cutting measures. 

Spot gold was slightly higher at $2,031.03 an ounce. US gold futures increased by 0.1% to $2,040.5 an ounce. 

On Monday, benchmark 10-year Treasury yields decreased to 4.2775% from 4.2990%, increasing the attraction of non-yielding metal.

New single-family home sales in the United States increased less than anticipated in January, according to data released on Monday, although the Dallas Federal Reserve’s monthly manufacturing activity index showed improvement. 

Recent statements made by Fed policymakers indicated that the US central bank was not in a rush to lower interest rates, which effectively sealed bets against any rate reductions before to June.

According to LSEG’s interest rate probability software, IRPR, markets are presently pricing in roughly 80 basis points of rate reductions for 2024, with a 62% probability that the first quarter-point decrease will occur in June. Investing in non-yielding bullion is more appealing when interest rates are lower.

The U.S. Federal Reserve’s favourite inflation indicator, the core personal consumption expenditures (PCE) price index, is expected to release data on durable goods orders in the United States later today, and on Thursday, which is when the markets will be waiting for it.

Investors were also keeping an eye on the possibility that, should Congress fail to reach a consensus on a borrowing extension by Friday, U.S. government agencies would close. 

Spot silver was steady at $22.52 per ounce, palladium dropped 0.2% to $949.36, while spot platinum increased 0.2% to $881.75 per ounce. 

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