Gold price falls as traders await US inflation data for clues on Fed rate cut

By Rahul Paswan

(Reuters) – Gold prices fell 1% on Monday on profit-taking as investors eagerly awaited key inflation figures this week for clues about U.S. interest rate cuts this year.

Spot gold fell 1% to $2,336.76 an ounce by 5:45 p.m. GMT, hitting its highest level since April 22 on Friday.

US gold futures closed 1.3 percent lower at $2,343.

“This could cause some people to exit the gold market ahead of these risk events, such as Fed Chairman Jerome Powell's speech or the producer price and consumer price indices released this week,” said Phillip Streible, chief market strategist at Blue Line Futures.

“Gold bulls are rightly concerned that the Federal Reserve needs weaker inflation data, not just weaker employment numbers, to justify rate cuts,” said Tai Wong, an independent metals trader based in New York.

The yellow metal rose by more than 1 percent last week following weak labor market data, supporting speculation about an interest rate cut in the US this year.

A clear majority of economists surveyed by Reuters expect the Fed to cut its key interest rate twice this year, starting in September.

According to the CME FedWatch tool, traders are currently calculating a 63% probability of a rate cut in September. Lower interest rates reduce the opportunity cost of holding non-yielding gold.

The focus of the markets this week is on the US Producer Price Index (PPI) data on Tuesday, followed by the Consumer Price Index (CPI) data to be released on Wednesday.

Among other precious metals, silver rose 0.3% to $28.23 an ounce, while palladium fell 1.7% to $961.50.

Platinum rose above the key $1,000 per ounce mark, hitting a near one-year high. The price rose 0.6 percent to $1,000.55 per ounce.

However, consulting firm Metals Focus expects average prices for platinum and palladium to decline this year compared to 2023, despite another year of structural deficit.

BHP Group, the world's largest listed mining company, said Anglo American had rejected a revised takeover offer that would have valued the company at £34 billion ($42.67 billion).

(Reporting by Rahul Paswan and Brijesh Patel in Bengaluru; Editing by Shilpi Majumdar, Shailesh Kuber and Alan Barona)