Gold remains well supported until $1,970 – analyst
Silver eases, palladium up
By Arundhati Sarkar
May 10 (Reuters) – Gold prices eased on Wednesday, after rising in the previous two sessions, as investors positioned for April U.S. inflation data, which could have a bearing on the Federal Reserve’s interest rate policy.
Spot gold XAU= was down 0.3% to $2,028.87 per ounce at 1000 GMT, while U.S. gold futures shed 0.3% to $2,036.70.
The U.S. consumer price index (CPI) data is due at 1230 GMT. Economists polled by Reuters expect a 5.5% year-on-year increase in core consumer prices for April.
“Today’s losses in gold prices arise mainly from the hedging up of the US dollar which kicked in as the European session got underway,” said ActivTrades senior analyst Ricardo Evangelista, adding that, if inflation came in at the expected levels, a significant impact on gold prices was not expected.
The U.S. dollar ticked up 0.1%. A firmer U.S. currency makes gold purchases less favourable for overseas investors. USD/
Fed Chair Jerome Powell has said it is now an open question whether further rate increases will be warranted in an economy still facing high inflation, but also showing signs of a slowdown.
While gold is considered a hedge against inflation, rising interest rates dull non-yielding bullion’s appeal.
However, analysts have said gold could attempt another run to record high levels, given persistent economic worries including U.S. debt ceiling jitters.
Concerns about a potential U.S. debt ceiling default are keeping investors from taking on higher risk, and so gold remains well supported for the time being down to $1,970, while resistance may arise around $2,066-$2,076, Daniela Hathorn, a senior market analyst at Capital.com, said.
President Joe Biden and top lawmakers agreed on Tuesday to further talks aimed at breaking a deadlock over raising the $31.4 trillion U.S. debt limit.
Elsewhere, spot silver fell 0.3% to $25.55 per ounce, while platinum was flat at $1,104.34.
