Gold lacks real catalyst ahead of US inflation data

Although gold attracted some buyers on Tuesday, the precious metal struggled to benefit from the move up. The precious metal is trading at $2029.70 per ounce at the time of writing.

The Fed’s policy stance is expected to change due to a decrease in consumer inflation expectations, which could potentially boost the non-yielding gold price. However, the US monthly jobs report indicates a resilient labor market, allowing the Fed to maintain higher interest rates. Hawkish comments by Fed officials have led to a fresh increase in US Treasury bond yields, supporting the US Dollar and limiting the gold price.

Gold prices are being held back by a stable equity market performance, with investors waiting for the release of the latest US consumer inflation figures. The data shows that US consumers’ short-run inflation projection fell to the lowest level in nearly three years in December, undermining the US Dollar and benefiting the gold price.

This data reaffirms expectations for an imminent shift in the Federal Reserve’s policy stance, but investors are scaling back their expectations for more aggressive policy easing due to a still-resilient US economy.

The market is focusing now on Thursday’s US consumer inflation figures, which could determine gold’s next leg of a directional move. Technically, any subsequent increase may face resistance near the $2,040 horizontal zone, potentially retesting Friday’s swing high.