GOLD PRICE FACES PRESSURE AHEAD OF US INFLATION

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  • Gold price dips slightly as investors await US Inflation data for fresh guidance.
  • US bond yields face pressure as safe-haven demand eases ahead of the inflation report.
  • Market expectations for the Fed reducing interest rates in June remain firm.

Gold price (XAU/USD) falls slightly in Tuesday’s European session. The yellow metal is broadly stuck in a tight range around $2,180 as investors await the United States Consumer Price Index (CPI) data for February, which will be published at 12:30 GMT, for fresh guidance. 

The precious metal exhibits some pressure ahead of the inflation data. Strong CPI data could lead to a decline in market expectations for Federal Reserve (Fed) rate cuts in the June policy meeting. This will increase of opportunity cost of holding investments in non-yielding assets, such as Gold. Meanwhile, softer-than-expected data could help Gold prices advance further. 

The 10-year US Treasury yields fell to 4.09% due to cheerful market sentiment. However, a hotter-than-expected inflation report could increase yields on interest-bearing bonds. 

The US Dollar Index (DXY), which closely tracks the Greenback’s value against six major currencies, remains steady near 102.85. The USD index oscillates inside Monday’s trading range as investors stay on the sidelines ahead of inflation data. A sticky inflation report could improve the US Dollar's appeal as it will allow the Fed to keep interest rates higher for a longer period.


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