Gold prices edge lower as dollar rebounds before more Fed, economic cues

investing.com:

Investing.com-- Gold prices fell slightly on Tuesday after a strong run-up in recent sessions, while a rebound in the dollar also pressured prices ahead of more upcoming economic data and signals from the Federal Reserve.

The yellow metal benefited from increased safe-haven demand in recent sessions, amid an escalation in military action in the Middle East. A softer dollar also benefited bullion prices.

But the dollar rebounded on Tuesday, as markets hunkered down before addresses from Fed officials this week, which are expected to offer more cues on when the central bank will begin trimming interest rates this year.

Spot gold fell 0.3% to $2,049.41 an ounce, while gold futures expiring in February fell 0.3% to $2,052.90 an ounce by 23:35 ET (04:35 GMT).

The dollar index surged 0.5% on Tuesday, with demand for the greenback increasing ahead of an address by Fed Governor Christopher Waller later on Tuesday. His comments on the potential for a spring rate cut will be closely watched, after consumer and producer inflation data for December offered somewhat mixed cues to markets.

U.S. industrial production and retail sales data readings are due on Wednesday and are set to provide more signals on the economy. Any signs of economic resilience gives the Fed more headroom to keep rates higher for longer.

Traders were seen slightly trimming bets on a March 2024 rate cut, according to the CME Fedwatch tool. Expectations of early interest rate cuts were a key driver of a gold rally in recent weeks, given that the yellow metal benefits from a low-rate environment.

Among industrial metals, copper prices fell on Tuesday, coming under pressure from a stronger dollar and as traders positioned for more cues from the world’s largest