BENGALURU- Gold prices drifted up on Tuesday, with spotlight shifting to key inflation reports due this week, which could offer more insights on the pace and scale of the US Federal Reserve’s interest rate cuts this year.
Spot gold was up 0.2 percent at $2,340.77 per ounce after falling 1 percent on Monday.
US gold futures rose 0.2 percent to $2,346.30.
The CPI data is expected to show core inflation rose 0.3 percent month-over-month in April, down from 0.4 percent the prior month, according to a Reuters poll, pulling the annual rate down to 3.6 percent .
“If gold manages to hold above $2,320- $2,330 range, that is a sign of positiveness. That means short-term momentum will be bullish and with that support after a weaker CPI data, potentially gold could test the all-time high level in the short-term,” said Kelvin Wong, a senior market analyst for Asia Pacific at OANDA.
However, currently “gold prices are supported by ongoing stagflationary risk scenario that is kind of ignoring the whole higher cost of holding gold.”
Bullion is known as inflation hedge but elevated interest rates reduce the opportunity cost of holding gold.
