Gold holds ground on softer dollar, focus on US inflation data

Gold prices held steady on Tuesday helped by a weaker dollar, as investors awaited more U.S. economic data this week that could shed light on the Federal Reserve‘s monetary policy outlook amid surging market expectations of interest rate cuts.

FUNDAMENTALS

* Spot gold was flat at $2,027.15 per ounce, as of 0105 GMT. U.S. gold futures were unchanged at $2,040.90.

* The dollar was down 0.1% against its rivals, making gold less expensive for other currency holders.

* The Fed last week signalled that the historic tightening of monetary policy engineered over the last two years is at an end and lower borrowing costs are coming in 2024.

* The Fed is not precommiting to cutting interest rates soon and swiftly, and the jump in market expectations that it will do so is at odds with how the U.S. central bank functions, Chicago Fed President Austan Goolsbee said on Monday.
* Markets are now pricing in about a 69% chance of a Fed rate cut in March, according to CME FedWatch tool. Lower interest rates tend to support non-interest-bearing bullion. * Investors are awaiting a series of U.S. economic data this week, including the November core personal consumption expenditure (PCE) index report, the Fed’s preferred measure of underlying inflation, due on Friday.

* Meanwhile, oil prices extended gains as attacks by Yemen’s Iran-aligned Houthi militants on ships in the Red Sea disrupted maritime trade and forced reroutes.

* The Bank of Japan concludes its two-day monetary policy meeting later in the day, where it’s expectated to maintain its ultra-loose monetary settings.

* Spot silver gained 0.1% to $23.80 per ounce, while platinum rose 0.3% to $948.18 and palladium eased 0.2% to $1,181.85.