Gold trades in tight range ahead of US inflation print

Gold prices traded in a tight range on Wednesday (10 April) as traders braced for key US inflation data that could determine the Federal Reserve's next monetary policy moves.

Spot gold XAU= was down 0.3% at $2,027.78 per ounce, as of 0630 GMT, after being listless earlier in the session. US gold futures GCv1 were down 0.4% at $2,035.00.

The US consumer price index (CPI) data is due at 1230 GMT. Economists polled by Reuters expect a 5.5% year-on-year increase in core consumer prices for April.

If the US inflation remains moderately controlled, it may lead to a pause in Fed rate hikes, which will weaken the dollar and support gold, said Hareesh V, the research head at Geojit Financial Services.

Markets are currently pricing in a 79% chance of the US central bank holding rates at their current level in June.

On Tuesday, Fed Governor Philip Jefferson said the US economy is slowing in an "orderly fashion," while New York Fed President John Williams said it is too soon to say whether the central bank is done raising interest rates.

Although gold is considered a hedge against inflation, rising interest rates dull non-yielding bullion's appeal.

The weak outlook for the US currency and yields reignite the safe-haven status of gold, Hareesh said.

"Worries over the global economy and demand-supply outlook may also support the commodity in the near future."

Investors are also closely watching the developments surrounding the US debt ceiling.

President Joe Biden and top lawmakers agreed on Tuesday to further talks aimed at breaking a deadlock over raising the $31.4 trillion US debt limit, with just three weeks before the country may be forced into an unprecedented default.

According to Reuters technical analyst Wang Tao, spot gold may retrace the $2,019-$2,024 per ounce range.

Spot silver XAG= fell 0.3% to $25.54 per ounce, platinum XPT= edged 0.1% higher to $1,105.34, while palladium XPD= was flat at $1,570.35