PRECIOUS-Gold rangebound as markets position for US Fed outcome, inflation data

BY Reuters | ECONOMIC | 06/12/24 05:55 AM EDT

*

US CPI data due at 1230 GMT

*

Fed's policy meet to conclude later in the day, Powell to speak

*

Any lean towards 2 rate cuts to support gold prices - analyst

*

Gold rush grips Asia despite near-record prices

(Recasts and updates prices as of 0929 GMT)

By Harshit Verma

June 12 (Reuters) - Gold prices traded in a narrow range on Wednesday as investors awaited the U.S. consumer inflation print due later in the day and the Federal Reserve's commentary on its interest rate policy.

Spot gold was 0.1% lower at $2,314.56 per ounce, trading in a $7 range, as of 0929 GMT. U.S. gold futures rose 0.2% to $2,331.10.

Investors will assess the inflation situation when U.S. consumer price index numbers are released at 1230 GMT, just before the Fed concludes its two-day policy meeting.

"What is worrying the Fed is that inflation is not coming down as quickly as thought, say, at the beginning of the year. With the jobs market being remarkably strong, they are going to push rate cuts back - a headwind for gold," said Russell Shor, senior market specialist at Tradu.

"Most importantly, you have got to watch the median dot plot. If FOMC suggests two rate cuts instead of one rate cut (that the market is pricing), that will support gold."

The market is divided on whether the Fed would cut rates once or twice this year after a strong U.S. labour report, so attention will be on policymakers' updated economic projections and Chair Jerome Powell's press conference.

Strong U.S. jobs data and reports of China's central bank holding off gold purchases triggered bullion's biggest daily drop since November 2020 last week.

"While China did take a break from gold in May, I don't believe that the People's Bank of China are finished with their diversification efforts away from the U.S. dollar," Tim Waterer, chief market analyst at KCM Trade, said in a note.

Demand for gold in Asia is surging despite prices hovering near the record highs hit in May, industry officials said.

Spot silver rose 0.5% to $29.39 per ounce, platinum was down 0.4% at $948.20 and palladium gained 0.2% to $885.56.

(Reporting by Harshit Verma and Sherin Elizabeth Varghese in Bengaluru; Editing by Jan Harvey)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article