Gold inches higher ahead of US inflation data

On MCX, February futures rose 0.38% to ₹56713.00 per 10 gram, surpassing previous high of ₹58847.00. Silver futures also edged higher to ₹66427.00 per kg, up 0.43%.

Gold, being a non-yielding asset, tends to benefit when interest rates are low as it reduces the opportunity cost of holding bullion.

“Global commodities had a mixed week. Energy and agri commodities made good gains, while metals were notable losers. Crude, natural gas and wheat were top gainers, while Zinc, Aluminum, and coal were top losers. Precious metals were mixed with gold gaining marginally and silver losing,” said Amit Kumar Gupta, Founder at Fintrek.

Traders will keep an eye on Tuesday’s January US consumer price index (CPI) data, which is expected to show the core CPI figure gaining 0.4% month-on-month.

Meanwhile, spot gold was up 0.1% at $1,856.01 per ounce, as of 0048 GMT, after falling to its lowest since early-January in the previous session. US gold futures edged 0.1% higher to $1,865.60.

The dollar index slipped 0.1%, making greenback-priced gold less expensive for buyers holding other currencies.

The Fed will need to continue to raise interest rates in order to get them to a level high enough to bring inflation back down to the central bank’s target rate, Fed Governor Michelle Bowman said on Monday.

Rising rates dim bullion’s appeal as they increase the opportunity cost of holding the non-yielding asset.

Money markets expect the Fed’s target rate to peak at 5.195% in July, from a current range of 4.5% to 4.75%.

The head of the International Monetary Fund (IMF) said on Monday financial markets have good reason to be more upbeat, pointing to the U.S. economy likely avoiding recession and China’s reopening from pandemic controls.

Spot silver rose 0.1% to $21.98 per ounce, platinum edged up 0.1% to $954.87, while palladium firmed 0.2% to $1,569.85.