Written by Sherin Elizabeth Varghese
(Reuters) – Gold prices fell on Monday as investors braced for a key U.S. inflation report that could reveal the timing of the Federal Reserve's first interest rate cut. The stock has fallen back from the two-week high it hit in the previous session.
Spot gold was down 0.5% at $2,348.45 an ounce at 0753 GMT. US gold futures fell 0.9% to $2,354. On Friday, prices hit their highest since April 22nd.
U.S. Producer Price Index (PPI) statistics will be released on Tuesday, followed by the Consumer Price Index (CPI) on Wednesday.
According to a Reuters poll, the median forecast is for core consumer prices to rise 0.3% in March, compared with 0.4% in March, bringing the annual rate down to 3.6%.
Matt Simpson, senior analyst at City Index, said: “Gold prices have fallen back from last week's highs, but we suspect the bulls are simply looking for an opportunity to reload at a better price.” Ta.
“Inflation will not go away as quickly as dovs expect, which could lead to volatility in gold trading around these highs at a time when gold prices typically have negative returns. .”
Expectations for interest rate cuts this year are rising after April's weaker-than-expected U.S. employment report and last week's weak employment report.
Traders expect the U.S. central bank to begin an easing cycle in September. When interest rates fall, the opportunity cost of holding gold decreases.
But comments from Fed officials last week were mixed as speakers debated whether interest rates were high enough. Rising consumer inflation expectations revealed in Friday's survey could further complicate the debate.
Spot gold could test support at $2,351 an ounce after failing to break out of the $2,377 resistance, Reuters technical analyst Wang Tao said. [ TECH/C]
Spot silver was unchanged at $28.15 an ounce, platinum rose 0.4% to $998.30 and palladium rose 0.4% to $981.17.
(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Shelly Jacob Phillips and Mrigank Dhaniwala)