Global investors are eagerly awaiting the release of key inflation data from the US economy, with gold prices holding steady above $2,000 in anticipation. Gold prices saw a sharp decline last week after a stronger-than-expected labor market report raised the possibility that the Federal Reserve would remain hawkish on interest rates for longer. However, markets expect the Fed to pause its rate hike cycle, and any upside in gold prices is expected to be limited by higher interest rates. Safe-haven demand for gold has also eased in recent sessions, with fears of an imminent US banking crisis receding.
As of 21:58 ET (01:58 GMT) on Tuesday, spot gold rose by 0.1% to $2,022.85 an ounce, while gold futures fell by 0.2% to $2,029.85 an ounce. The focus is now on US consumer price index inflation data, which is expected to show a slight easing of inflation in April compared to the prior month. However, inflation is still expected to remain above the Federal Reserve's annual target range, which could elicit a hawkish reaction from the central bank.
Fed Fund futures prices data indicates that markets are pricing in an 88% chance that the Fed will keep its rates on hold in June. However, markets have also scaled back their bets on any potential rate cuts this year, given that the Fed has downplayed the possibility of such a scenario. Other precious metals, including platinum and silver, saw a slight retreat on Tuesday, while copper prices fell by 0.5% to $3.9052 a pound after logging strong gains over the past four sessions.
Investors are also closely watching China's trade data, which is due to be released later in the day. Meanwhile, concerns over a banking crisis and potential recession remain in play, adding to global economic uncertainty. However, the recent collapse of several banks did not have as much of an impact on credit conditions as feared, according to a Federal Reserve survey of loan conditions.
