Gold was steady on Tuesday, although prices moved in a tight range as traders awaited US inflation data due later in the day and the Federal Reserve's policy decision amid expectations of a pause in the central bank's rate hike trajectory. Spot gold held its ground at $1,956.30 per ounce by 02:15 GMT US gold futures held steady at $1,970.80.
"The market is waiting for the US CPI and FOMC meeting to provide a clearer direction on gold price. (However) there is a lack of catalyst for gold to outperform other asset classes regardless of US Fed policy decision making," said Michael Langford, director at corporate advisory firm AirGuide.
The consumer price index for May is expected to show a slowing rise in inflation on a year-over-year basis to 4.1 per cent from the April reading of 4.9 per cent, according to economists polled by Reuters, with a monthly increase of 0.2 per cent, down from a 0.4 per cent rise the prior month.
While gold is seen as a hedge against inflation, higher rates to tame price pressures generally weigh on the non-yielding asset's appeal. Traders are pricing in a roughly 80 per cent chance of the Fed keeping rates on hold, and a 20 per cent chance of a 25-basis-point rate hike, according to the CME FedWatch tool.
"Gold should keep trending sideways towards the 100-day moving average of $1,941/oz, if this breaks the next support level is the 200-day moving average of $1,841/oz," AirGuide's Langford added.
The European Central Bank will deliver its rate decision on Thursday and is widely expected to raise rates by 25 basis points. But the Bank of Japan, which will announce its verdict on Friday, is expected to maintain its ultra-loose policy. Among other precious metals, spot silver rose 0.2 per cent to $24.0849 per ounce, platinum steadied at $990.23, and palladium gained 0.8 per cent to $1,360.18.
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