Spot gold remained steady at $2,177.24 per ounce, and U.S. gold futures dipped 0.1% to $2,183.90
Gold prices paused after a historic surge on Monday, driven by a slowdown in the U.S. labour market and statements from the Federal Reserve. Traders are now looking to the U.S. inflation report for further indications on when rate cuts may occur.
As of 0602 GMT, spot gold remained steady at $2,177.24 per ounce. Meanwhile, U.S. gold futures dipped by 0.1% to $2,183.90.
Following data showing a cooling U.S. labour market, gold reached a new high of $2,194.99 for the fourth consecutive day on Friday.
With big speculators having increased net-long exposure at their fastest weekly pace in 3.5 years last Tuesday, gold is clearly in demand and not a market to short for any length of time whilst traders expect Fed cuts, City Index senior analyst Matt Simpson said.
According to data released on Friday, COMEX gold speculators increased their net long positions by 63,018 contracts to 131,060 in the week ending March 5.
Prices will simply consolidate at lofty levels heading into consumer price inflation (CPI) data for February, due on Tuesday, as that is likely the single biggest driver of gold prices this week, given that the Fed are now in a blackout period, Simpson said.
A potential decline in the CPI print could strengthen the argument for an early rate cut, providing support for gold prices. Federal Reserve Chair Powell expressed greater confidence in reducing rates in the upcoming months during his Congressional testimony last week.
Traders are currently factoring in three to four quarter-point (25 bps) U.S. rate cuts, with a 75% likelihood of the first cut occurring in June, based on LSEG’s interest rate probability app.
Lower interest rates enhance the appeal of non-yielding bullion.
