Spot Gold traded mostly little changed at the start of the week amid investor caution ahead of the key US inflation data and the outcome of the Federal Reserve’s policy meeting.
Markets are currently pricing in a 74% chance that the US central bank will keep the target range for the federal funds rate unchanged at 5.00%-5.25% on Wednesday.
“While the Fed is expected to hold their interest rate, they are unlikely to deliver a dovish undertone required to tempt gold bulls back to the table in a meaningful way,” Matt Simpson, senior market analyst at City Index, was quoted as saying by Reuters.
The analyst also said that the yellow metal did not seem to be in any hurry to break out of the $1,935-$1,985 range and if the Federal Reserve’s message was “not as hawkish as expected, it could allow gold to head for the $1,985-$2,000 zone.”
Meanwhile, a hotter-than-anticipated US CPI figure could affect interest rate expectations. Market consensus points to the general CPI increasing 4.1% year-on-year in May after a 4.9% rise in April.
Annual core CPI inflation is expected to have slowed down to 5.3% in May from 5.5% in April.
The US CPI report is due out at 12:30 GMT on Tuesday.
As of 8:34 GMT on Monday Spot Gold was edging up 0.17% to trade at $1,964.15 per troy ounce. Last Friday, the precious metal went up as high as $1,973.16 per troy ounce, which has been its strongest price level since June 2nd ($1,983.50 per troy ounce).
Gold Futures for delivery in August were inching up 0.07% on the day to trade at $1,978.55 per troy ounce, while Silver Futures for delivery in July were down 0.44% to trade at $24.302 per troy ounce.
The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging down 0.22% to 103.330 on Monday. Last Friday, the DXY went down as low as 103.295, which has been its weakest level since May 23rd (103.163).
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