Gold Prices Drift Higher as Key US Inflation Data Looms

A salesman arranges gold bangles at a jewelry shop in Chennai, India, on May 10, 2024. (Photo by R. Satish BABU / AFP)
A salesman arranges gold bangles at a jewelry shop in Chennai, India, on May 10, 2024. (Photo by R. Satish BABU / AFP)
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Gold Prices Drift Higher as Key US Inflation Data Looms

A salesman arranges gold bangles at a jewelry shop in Chennai, India, on May 10, 2024. (Photo by R. Satish BABU / AFP)
A salesman arranges gold bangles at a jewelry shop in Chennai, India, on May 10, 2024. (Photo by R. Satish BABU / AFP)

Gold prices drifted up on Tuesday, with the spotlight shifting to key inflation reports due this week, which could offer more insights on the pace and scale of the US Federal Reserve's interest rate cuts this year.
Spot gold was up 0.4% at $2,344.39 per ounce by 0557 GMT after falling 1% on Monday, Reuters reported.
US gold futures rose 0.3% to $2,350.00.
The US producer price index data is scheduled for release at 1230 GMT, followed by the consumer price index on Wednesday. The CPI data is expected to show core inflation rose 0.3% month-over-month in April, down from 0.4% the prior month, according to a Reuters poll, pulling the annual rate down to 3.6%.
"If gold manages to hold above $2,320- $2,330 range, that is a sign of positiveness. That means short-term momentum will be bullish and with that support after a weaker CPI data, potentially gold could test the all-time high level in the short-term," said Kelvin Wong, a senior market analyst for Asia Pacific at OANDA.
However, currently "gold prices are supported by ongoing stagflationary risk scenario that is kind of ignoring the whole higher cost of holding gold."
Bullion is known as inflation hedge but elevated interest rates reduce the opportunity cost of holding gold.
Last week's weak jobs report and a softer-than-expected US payrolls report for April have increased expectations for rate reductions this year. The Fed will cut its key interest rate twice this year, starting in September, according to a stronger majority of economists polled by Reuters.
Spot silver rose 0.8% to $28.41 per ounce and palladium gained 0.8% to $968.43.
Platinum was up 0.6% to $1,002.90, after hitting a near one-year peak on Monday.
BHP Group is likely to sweeten its $43 billion takeover offer for Anglo American for a second time and possibly add cash, investors in both companies said, after the London-headquartered target rejected a higher bid.



Gold Prices Hit Records Above $3,300/oz

FILE PHOTO: Gold bars are displayed at a gold jewelry shop in the northern Indian city of Chandigarh May 8, 2012. REUTERS/Ajay Verma/File Photo
FILE PHOTO: Gold bars are displayed at a gold jewelry shop in the northern Indian city of Chandigarh May 8, 2012. REUTERS/Ajay Verma/File Photo
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Gold Prices Hit Records Above $3,300/oz

FILE PHOTO: Gold bars are displayed at a gold jewelry shop in the northern Indian city of Chandigarh May 8, 2012. REUTERS/Ajay Verma/File Photo
FILE PHOTO: Gold bars are displayed at a gold jewelry shop in the northern Indian city of Chandigarh May 8, 2012. REUTERS/Ajay Verma/File Photo

Gold prices pierced the $3,300 an ounce barrier to hit record highs as investors sought a refuge from the turbulence surrounding trade tensions between the United States and China.
Spot gold hit a record of $3,317.90 per ounce on Wednesday, resuming a rally based on US President Donald Trump's tariff policies, robust central bank buying and prospects of interest rate cuts by the Federal Reserve, Reuters reported.
"Gold is re-calibrating to reflect the current state of world affairs ... If the price is telling us something, then it’s a distinct warning bell," said independent analyst Ross Norman.
"High conviction buying that commenced about a year ago - likely unreported central bank buying - is being compounded by buying on price strength."
Bullion has gained around 26% so far this year, in a rise that has drawn comparisons with its 1980 rally during the Iranian Revolution, when prices shot up around 118% between November 1979 and January 1980.
Trump on Tuesday rolled out the latest of his tariff policies, ordering an investigation into potential new levies on all US critical minerals imports and other goods.
Gold is traditionally used to hedge against political turmoil.
"Some longer-term gold owners are taking profit at these fresh record highs, but new inflows are also running strong," said Adrian Ash, director of research at BullionVault.
Gold ETFs saw an inflow of 226.5 metric tons, worth $21.1 billion, in the first quarter of 2025, the largest amount since the first quarter of 2022, when markets were grappling with the consequences of Russia's invasion of Ukraine.
"ETF demand is the additional new component that had otherwise been missing and is certainly helping to fuel the rise," Norman added.
Gold has also gained from the lower dollar, near a three-year low, making bullion a more attractive investment for other currency holders.
"The next milestone for gold is $3,500. Expect that before too long," Norman added.
Central bank buying has further buoyed gold, with China's central bank adding to its reserves in March for the fifth straight month.
Gold posted 25 all-time highs this year, of which 13 are above the $3,000 level.