Gold stuck in tight range as traders brace for US inflation data

[BENGALURU] Gold prices were stuck in a tight range on Thursday (Feb 10) as investors awaited US inflation data that could offer fresh clues about the pace of the Federal Reserve's monetary policy tightening.

Spot gold was steady at US$1,833.26 per ounce by 1.13 am GMT, hovering close to Wednesday's high of US$1,835.60. US gold futures fell 0.1 per cent to US$1,834.30.

Benchmark 10-year US Treasury yields were off their November 2019 highs, while the dollar edged higher.

The inflation data is expected to show a 0.5 per cent month-over-month increase in January, and 7.3 per cent for the year, according to economists polled by Reuters.

Fed fund futures traders are pricing in more than five 25 basis point interest rate increases by December, and a 27 per cent chance that the first hike in March is by 50 basis points.

A robust inflation reading is expected to burnish gold's mettle as an inflation hedge, but any interest rate hike to contain pricing pressure would raise the opportunity cost of holding non-yielding bullion.

The Fed will have to move faster than it has in the past to remove accommodation and tame inflation that is well above target, but it may not be necessary to start the liftoff in rates with a half-percentage point in March, Cleveland Fed Bank President Loretta Mester said.

Russia has increased military capabilities along its border with Ukraine and in Belarus, according to the Pentagon.

Ukraine believes there is still a chance of resolving the West's standoff with Russia through diplomacy yet there are already grounds to impose sanctions on Moscow, Foreign Minister Dmytro Kuleba said.

Silver fell 0.3 per cent to US$23.23 per ounce, platinum was also down 0.3 per cent to US$1,030.92, while palladium was steady at US$2,279.51. REUTERS