Gold flat as focus shifts to U.S. inflation data

An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo

(Reuters) -Gold prices were flat on Tuesday as traders maintained caution ahead of the U.S. inflation print due later in the day for further cues on the interest rate path in the world’s largest economy.

Spot gold was little changed at $1,947.39 per ounce, as of 1021 GMT, trading in a narrow range of $6, after hitting its lowest in more than three weeks on Monday. U.S. gold futures rose 0.1% to $1,951.30.

“Gold seems to be on standby ahead of the key U.S. inflation report. Further evidence of cooling inflationary pressures may reinforce the argument that the Fed is done with hikes… with gold bulls eyeing the $1,968 resistance,” FXTM senior research analyst Lukman Otunuga said.

“But, if inflation print is above forecasts, this could boost speculation around the Fed raising rates in early 2024 – pressuring gold as a result.”

The U.S. consumer price index (CPI) is due at 13:30 GMT. Economists polled by Reuters expect headline U.S. CPI to have slowed to 3.3% in October from 3.7% in September, with the so-called core inflation rate that strips out volatile components unchanged at 4.1%

Federal Reserve Chair Jerome Powell commented last week that the bank is not sure that interest rates are high enough to tame inflation. The market is pricing in an 86% chance that the U.S. central bank will leave rates unchanged in December, according to the CME FedWatch tool. Despite being a traditional hedge against inflation, higher interest rates raise the opportunity cost for holding bullion. COMEX gold speculators lowered their net long position by 1,107 contracts to 105,236 in the week ended Nov. 7, the U.S. Commodity Futures Trading Commission said on Monday. [CFTC/] Investors will also keep a tab on the U.S. producer price index data due on Wednesday. Spot silver rose 0.7% to $22.5 per ounce, platinum gained 0.6% to $869.83, and palladium climbed 0.9% to $990.76.

Reporting by Harshit Verma in Bengaluru; Editing by Tasim Zahid