Gold prices steady as lower yields counter stronger dollar

Benchmark 10-year US Treasury yields slipped to 4.28 per cent from 4.31 per cent on Tuesday, while the dollar index rose 0.2 per cent.

“The anticipation is that the PCE report, along with the upcoming gross domestic product data, might act as catalysts for gold to break out of its current trading range within the $2,020-$2,050 area,” said Luca Santos, analyst, ACY Securities.

Data on Tuesday showed US durable goods orders posted the largest drop in nearly four years in January. U.S. consumer confidence also slid in February.

Markets now await the US GDP data due at 13:30 GMT, while the Federal Reserve’s preferred gauge of inflation – the core personal consumption expenditures (PCE) price index – is due on Thursday.

Fed Governor Michelle Bowman on Tuesday reinforced the US central bank’s patient stance on easing, given upside risks to inflation.

At least nine more Fed officials are due to speak this week.

Traders are betting on about 79 basis points (bps) of rate cuts for 2024, with a 63 per cent chance of the first quarter-point (25 bps) cut coming in June, according to LSEG’s interest rate probability app.

Lower interest rates boost the appeal of holding non-yielding bullion.

On the technical front, spot gold may retest support at $2,025 an ounce, a break below could be followed by a drop to $2,015, according to Reuters market analyst Wang Tao.

Spot platinum fell 0.3 per cent to $885.60 per ounce, while palladium dropped nearly 1 per cent to $927.04, while silver fell 0.1 per cent to $22.40.