Written by Harshit Verma
(Reuters) – Gold prices took a break from a record rally on Monday as traders awaited inflation reports for new clues on when to cut interest rates. The rally was driven by a cooling U.S. labor market and comments from the Federal Reserve.
At 0339 GMT, spot gold was stable at $2,178.44 an ounce. US gold futures were flat at $2,185.30.
Gold hit an all-time high of $2,194.99 on Friday for the fourth day in a row, following data suggesting a cooling US labor market.
Matt Simpson, senior analyst at City Index, said: “Gold is clearly in demand, with major speculators increasing their net long exposure last Tuesday at the fastest weekly pace in three-and-a-half years. “This is not a market where you can short sell for any length of time while expecting the Fed to cut interest rates.” He said.
COMEX gold speculators increased their net long positions by 63,018 contracts to 131,060 contracts in the week ending March 5, according to Friday’s data. [CFTC/]
Simpson said that is likely to be the biggest driver of gold prices this week, given that the Fed is currently in a blackout period, and that the February consumer price index (CPI) will be released on Tuesday. Heading into the statistics, he said prices would simply remain firm at a higher level.
If the CPI numbers remain stable, this could provide grounds for an early interest rate cut and support gold prices. Fed Chairman Jerome Powell, in Congressional testimony last week, expressed more confidence in lowering interest rates in the coming months.
Traders are currently pricing in three to four quarter-point (25bps) rate cuts in the US, with a 75% chance of the first cut in June, according to the LSEG interest rate probability app.
Low interest rates make non-yielding bullion more attractive.
Spot silver fell 0.3% to $24.25, platinum fell 0.1% to $911.84 an ounce and palladium rose 0.3% to $1,023.15.
(Reporting by Harshit Verma in Bengaluru; Editing by Sherry Jacob-Phillips and Mrigank Dhaniwala)
