Investing.com-- Gold prices rose slightly in Asian trade on Tuesday, recovering from a rough start to the year as markets reassessed expectations for early interest rate cuts by the Federal Reserve before key U.S. inflation data due this week.
The yellow metal fell sharply below the $2,050 an ounce level over the past week, tracking a rebound in the dollar as strong labor market data brewed uncertainty over just how much impetus the Fed has to begin loosening policy early.
But gold prices saw some relief this week as the dollar fell from three-week highs, amid some profit-taking. Still, the yellow metal remained well below highs hit in December.
Spot gold rose 0.2% to $2,032.91 an ounce, while gold futures expiring in February rose 0.3% to $2,038.85 an ounce by 00:07 ET (05:07 GMT).
Traders remained heavily biased towards the dollar ahead of key consumer price index data due this Thursday. The reading is expected to show a mild pick-up in inflation in December which, coupled with the strong nonfarm payrolls reading, gives the Fed more headroom to keep rates higher for longer.
This spurred some trimming in expectations for early interest rate cuts, which in turn saw gold give up some gains made in December. The yellow metal still ended 2023 with a 10% gain.
Fed officials also pushed back against expectations for early interest rate cuts. Atlanta Fed President Ralph Bostic said that with inflation still well above the Fed’s 2% annual target, he remained biased towards policy staying tight in the near-term.
While Bostic still expects rates to eventually fall in 2024, he flagged only about 50 basis points of cuts- much smaller than what markets are expecting.
Traders were also seen steadily trimming bets that the Fed will
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