Gold retreats from near record-high levels ahead of US inflation data

GOLD prices slipped from near record-high levels on Tuesday, ahead of a key U.S. inflation report that could give more clarity on when the Federal Reserve might start cutting interest rates.

Spot gold was down 0.3% at $2,176.49 per ounce, as of 0743 GMT, after rising for nine consecutive sessions. Bullion hit a record peak of $2,194.99 on Friday.

U.S. gold futures also dipped 0.3% to $2,182.70.

The stellar run-up in gold prices calls for some near-term breather, IG market strategist Yeap Jun Rong said.

“Progress in U.S. inflation has somewhat stalled in the January’s read, but follow-up comments from policymakers seem to suggest that they are willing to look beyond it as a one-off. Another surprise run of hotter-than-expected inflation data for February will likely challenge that, which could drive some near-term unwinding in gold prices.”

The U.S. consumer price index (CPI) report for February, due at 1230 GMT, is likely to rise 0.4% for the month and keep the annual pace steady at 3.1%, according to a Reuters poll.

Traders are pricing in three to four quarter-point (25 bps) U.S. rate cuts, with a 72% chance for the first in June, as per LSEG’s interest rate probability app. Lower rates boost the appeal of non-yielding bullion.

Meanwhile, the U.S. Treasury is set to sell $39 billion in 10-year notes later in the day.

The bond auction is secondary in terms of the broader interest rate outlook and the main focus is still on the consumer and producer price numbers this week, but if there’s not much demand for bonds, it could push yields higher, reducing gold’s appeal, said Tim Waterer, chief market analyst at KCM Trade.

The dollar held broadly steady on Tuesday.

Spot platinum fell 0.4% to $929.70 per ounce, palladium dropped 0.8% to $1,022.90, while silver fell 0.2% to $24.37. – Reuters