- The gold price is facing some selling pressure around $2,018 in the early Asian session on Tuesday.
- Several Fed officials stressed last week that more evidence of progress in inflation is needed before cutting rates.
- Further stimulus announcements from China could boost the price of gold.
- The main point on Tuesday will be the US Consumer Price Index (CPI) for January.
The price of gold (XAU/USD) traded in negative territory for the fifth day in a row during the early Asian session on Tuesday. Talk of higher or longer rates from the US central bank (Fed) is putting some selling pressure on the unyielding yellow metal. Investors await key U.S. inflation data that could provide some insight into the Fed's next interest rate moves. The price of gold is currently trading near $2,018, down 0.06% on the day.
Meanwhile, the US Dollar Index (DXY), an index of the USD's value measured against a basket of six global currencies, is consolidating around 104.12. US Treasury yields slightly higher, with the 10-year yield at 4.17%.
Several Federal Reserve (Fed) officials stressed last week that more evidence of progress in inflation is needed before cutting rates. Tuesday's January CPI data will be the key reading, with an increase of 0.2% month-on-month and 3.0% year-on-year expected. Core CPI excludes volatile food and energy prices and is estimated to show an increase of 0.3% month-on-month and 3.8% year-on-year. Fed Fund futures are pricing in 107 basis points (bps) or about a 1% rate cut for 2024, down from 158bps less than a month ago.
Mainland China's financial markets are closed this week for the Lunar New Year holiday. China's inflation fell 0.8% year-on-year in January, the biggest drop in 15 years. This highlights the possibility of deflation in the world's second largest economy. However, gold's decline may be limited due to additional stimulus measures by the Chinese authorities to bolster the market.
Gold traders will be watching the US consumer closely for January Price index (CPI) on Tuesday. U.S. retail sales will be released on Thursday. Traders will take cues from the data and find trading opportunities around the price of gold.