Gold Flat As Investors Eye PCE Inflation Data

Gold futures were flat in the middle of the trading week as investors brace for the Federal Reserve’s preferred inflation data on Thursday. The yellow metal has struggled to carve out any momentum and is on track for a monthly loss. A combination of a stronger US dollar and higher Treasury yields has weighed on the precious metal.

April gold futures dipped $2.10, or 0.1%, to $2,042.00 per ounce at 15:19 GMT on Wednesday on the COMEX division of the New York Mercantile Exchange. Gold prices are on track for a February loss of 0.8% and are down 1.4% year-to-date.

Silver, the sister commodity to gold, continued to slide below $23 midweek. April silver futures declined $0.172, or 0.76%, to $22.585 per ounce. The white metal is poised for a monthly drop of 2%, adding to its year-to-date loss of 6%.

Financial markets are combing through the second estimate for the fourth-quarter gross domestic product (GDP) that experts say was a non-event as the revisions were tepid.

As of now, the October-to-GDP reading showed 3.2% and the revisions were caused by higher government and consumer spending and lower non-resident private investment.

In other midweek economic data, the 30-year mortgage rate was relatively unchanged at above 7%. This sent mortgage applications sliding 5.6% for the fourth straight week.

Additionally, retail inventories ex automobiles, edged up 0.3% in January, and wholesale inventories slid 0.1% last month.

The main event this week will be the personal consumption expenditure (PCE) price index for January. Economists expect the PCE to rise 0.3% monthly and core PCE, which excludes the volatile energy and food components, to jump 0.4%.

Anything topping the consensus estimate could hurt gold prices because it could force the Federal Reserve to keep interest rates higher for longer. This is bearish for the yellow metal because it influences the opportunity cost of holding non-yielding bullion.

US Treasury yields were red across the board on Wednesday, with the benchmark ten-year yield down 2.4 basis points to 4.291%. The two-year yield fell 4.1 basis points to 4.671%, while the 30-year bond dipped 1.7 basis points to 4.423%.

The greenback strengthened midweek. The US Dollar Index (DXY), a gauge of the buck against a basket of currencies, swelled 0.15% to 103.98, from an opening of 103.83. The index is on track for a monthly increase of 0.7% and has risen 2.6% year-to-date.

A stronger buck is bearish for dollar-denominated commodities like gold, making it more expensive for foreign investors to purchase.

In other metal markets, April copper futures dropped $0.019, or 0.5%, to $3.809 per pound. April platinum futures slumped $14.70, or 1.64%, to $882.30 an ounce. April palladium futures declined $23.70, or 2.49%, to $928.50 per ounce.

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