Gold is locked in a narrow range as investors await US inflation data

Gold prices moved in a narrow range on Tuesday ahead of US inflation data, which investors are looking for clues to the Federal Reserve’s policy path.

Spot gold remained unchanged at $2,023.41 an ounce, and by 0232 GMT, US gold futures were down 0.2 percent, at $2,030.10.

US consumer price data is due on Wednesday.

Ajay Kedia, director at Kedia Commodities in Mumbai, said that if the inflation report is released in a way that fuels fears of another rate hike in June, gold prices may eventually fall to a level between $1950 and $1920.

Bullion is a hedge against inflation, but high interest affects the attractiveness of non-return assets.

Dealers are now betting 92 percent that the US central bank will keep interest rates at their current level in June.

The New York Federal Reserve report showed that US consumers’ inflation expectations were mixed in April.

Besides economic data, market participants are also watching developments surrounding the US banking sector and the debt ceiling.

The Fed’s survey data released on Monday showed in the latest indication that higher central bank interest rates are starting to pay off in the financing sector.

Treasury Secretary Janet Yellen said on Monday that Congress’ failure to raise the $31.4 trillion federal debt limit would deal a massive blow to the US economy and weaken the dollar’s position as the global reserve currency.

As for other precious metals, spot silver rose 0.2 percent to $25.61 an ounce.

Platinum also rose 0.2% to $1,073.23, and palladium fell 0.3% to $1,548.58.