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U.S. dollar index up 0.2%
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Fed minutes due on Wednesday
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Traders await U.S. PCE, GDP data
(Updates prices)
By Kavya Guduru
Feb 21 (Reuters) - Gold traded in a tight range on
Tuesday as investors refrained from taking big positions ahead
of U.S. economic data that could influence the Federal Reserve's
interest rate-hike strategy.
Spot gold eased 0.1% to $1,838.66 per ounce, as of
0657 GMT, trading in a $7 range. U.S. gold futures fell
0.2% to $1,846.70.
High interest rates discourage investors from placing money
in non-yielding assets such as gold.
The "decline in gold prices has somewhat stabilised as
markets take stock on whether the hawkish repricing of the Fed
may have gone a little too fast," said OCBC FX strategist
Christopher Wong.
Gold prices hit their highest since April 2022 early this
month, but have since lost about 6% after a slew of U.S. data
showed signs of a resilient economy and a tight labour market,
fuelling concerns that rates would stay higher for longer.
The minutes of the Fed's latest policy meeting will be
released on Wednesday. Money markets expect the central bank to
raise benchmark rates above 5% by May, with a peak of 5.308%
expected in July. "Further hawkish repricing of the Fed will need to find a
new catalyst and that puts focus on core PCE," said OCBC's Wong,
referring to the personal consumption expenditure (PCE) data,
the Fed's preferred inflation measure.
"An upside print could see USD momentum gather traction and
put pressure on gold, but a downside surprise to data should see
a pause in hawkish Fed repricing and gold can recover."
Besides PCE data, gross domestic product numbers are also
due later this week.
The dollar index firmed 0.2%, making the
greenback-priced bullion more expensive for buyers holding other
currencies. Silver edged down 0.1% to $21.72 per ounce, platinum lost 0.2% to $924.88 and palladium slipped 0.8% to
$1,498.72. All three metals were off near one-week highs hit on
Monday.
(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu
Sahu and Savio D'Souza)
