Gold prices turn lower as investors await U.S. January inflation report

Price action

• Gold for April delivery
  GC00,
  -0.25%

  GCG23,
  -0.32%
  declined by $6.60, or 0.4%, to $1,884.10 per ounce on Comex.

• Silver futures for March delivery
  SI00,
  -0.78%

  SIH23,
  -0.78%
  fell 23.5 cents, or 1.1%, at $22.185 per ounce

• April platinum
  PLJ23,
  -2.31%
  declined by $23.80, or 2.4%, to $963.40 per ounce, while March palladium
  PLJ23,
  -2.31%
  fell by $32.90, or 2%, to $1,603 per ounce.

• March copper 
  HGH23,
  +1.15%
  gained 3.7 cents, or 0.9%, to $4.0725 per pound.

Market drivers

“Profit taking came,” Chintan Karnani, director of research at Insignia Consultants, told Market Watch, after April gold futures on Comex did not hold above $1,900.

Fed Chairman Jerome Powell and other Federal Reserve members’ comments on rising interest has “prevented short term aggressive buying in gold,” he said.

Gold looks set to tread water near the $1,900 per ounce level as traders await a reading on U.S. January consumer-price inflation due out next Tuesday.

“Gold looks like it will consolidate here until we get beyond the Valentine’s day inflation report,” said Edward Moya, Senior Market Analyst at OANDA, in a note to clients.

Moya blamed hawkish commentary from New York Fed President John Williams on Wednesday for helping to hold gold back from the $1,900 per ounce level, where most-active gold futures were trading as recently as last week.

The U.S. January CPI report is due out Tuesday. After months of inflation falling more quickly than economists had forecast, some traders of inflation-linked products are betting that the headline rate could fall as low as 2% in the coming months, a level that would put it in line with the Fed’s target.

The “real focus” will be on the January inflation numbers, said Karnani.

“If inflation falls substantially in January, will the [Fed] stop increasing interest rates after March or make a change in interest rate strategy? This is what I and traders will be the looking at,” he said. “At the end of the day, inflation control is the key motto for the [Fed] and all central banks.” 

Gold prices found support in early Thursday trading on the back of the dollar’s weakness versus other major currencies, which helped to boost the appeal of the dollar-denominated precious metal.

The ICE U.S. Dollar index
DXY,
-0.42%
fell 0.4% to 103.01 in Thursday dealings, off the day’s low of 102.64. Treasury yields were mostly lower after weekly U.S. jobless claims climbed 13,000 to 196,000, with the 10-year Treasury note yield
TMUBMUSD10Y,
3.598%
losing 5.2 points to 3.597%.