Gold hovers around $2,000 in anticipation of CPI data, more Fed cues

By Ambar Warrick

Investing.com -- Gold prices hovered just below recent highs on Tuesday, remaining relatively underpinned as markets awaited more cues on the U.S. economy from inflation data and the minutes of the Federal Reserve’s March meeting due later this week.

The yellow metal was buoyed by safe haven demand as sentiment remained weak amid fears of slowing economic growth and uncertainty over monetary policy, although prices had retreated from an over one-month high after U.S. nonfarm payrolls data showed continued resilience in the jobs market in March.

Markets are now looking to consumer price index inflation data, due on Wednesday, to gauge if the Federal Reserve has more impetus to keep raising interest rates - a scenario that is negative for gold markets. Wednesday’s reading is expected to remain relatively high.

Spot gold rose 0.1% to $1,993.94 an ounce, while gold futures rose 0.3% to $2,008.95 an ounce by 20:14 ET (00:14 GMT).

Minutes from the Fed’s March meeting are also due on Wednesday, and are expected to provide more insight into the central bank’s plans for raising interest rates, in the face of a potential banking crisis. The bank had raised interest rates by 25 basis points during the meeting and vowed to keep moving against inflation, although some analysts saw its tone as less hawkish than before.

While the collapse of several U.S. banks in March had spurred bets that the Fed will taper its pace of interest rate hikes, markets are now positioning for at least one more raise in May, as U.S. regulators acted to restore faith in the banking system.

But fears of more banking ructions saw gold remain well-bid as investors flocked to safe havens. Markets also remained wary of any more economic cracks due to the banking collapse, which could stymie growth later this year.

Other precious metals saw some bids on Tuesday, with platinum futures up 0.2%, while silver futures added 0.6%.

Among industrial metals, copper prices rose slightly, but remained under pressure from fears of slowing economic growth this year, as well as concerns over a recovery in Chinese demand.

Copper futures rose 0.2% to $3.9950 a pound.