14/03/2018 05:56 AST
Gold slipped on Tuesday, pressured by a firmer dollar and concern that US inflation data later in the day will be robust, strengthening the case for more US interest rate hikes.
Analysts polled by Reuters forecast the US consumer price index (CPI), due at 1230 GMT, rose 2.2 per cent in February year-on-year, compared with a 2.1 per cent increase a month earlier.
“If you have a higher than expected CPI reading today it would put more downward pressure on gold, especially if yields also go up,” said Georgette Boele, commodity strategist at ABN AMRO in Amsterdam.
“Overall the outlook is not looking that great in the short term. I still expect prices to go towards $1,300 (Dh4,775).”
Spot gold was down 0.3 per cent at $1,318.35 per ounce by 1022 GMT, while US gold futures for April delivery fell 0.2 per cent to $1,318.70 an ounce.
The dollar index was up 0.17 per cent at 90.047, while the dollar jumped to a two-week high against the yen.
A higher US CPI reading could stoke expectations that the Federal Reserve will likely raise interest rates four times, rather than three times, this year. Higher interest rates increase the opportunity cost of holding non-yielding bullion.
“Gold traders are adopting a more neutral stance ... While a March hike is fully priced in, traders usually get a bit anxious awaiting the Fed statement and key forward guidance,” said Stephen Innes, APAC trading head at OANDA.
“We should expect interest rate uncertainty to weigh on prices over the short term.”
Spot gold looks neutral in a range of $1,318-$1,327 per ounce and an escape could suggest a direction, according to Reuters Technical analyst Wang Tao.
In other precious metals, silver rose 0.1 per cent to $16.50 per ounce.
Net long positions in US silver futures increased for the first time since January, UBS analyst Joni Teves said in a note.
“Silver has been such an underperformer of late and one of the few positive factors currently is that net length is very lean. Despite recent gains, net speculative positions in silver are still only 18 per cent of the record.”
Platinum fell 0.5 per cent to $957.50 an ounce, while palladium was unchanged at $978.50 per ounce.
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