GLD

PRECIOUS-Gold treads cautiously as US PCE data takes spotlight

Credit: REUTERS/ALEXANDER MANZYUK

By Sherin Elizabeth Varghese

Feb 29 (Reuters) - Gold remained trapped within a narrow range on Thursday, as investors exercised patience in the run up to a key U.S. inflation number and remarks from Federal Reserve officials to glean clarity on the trajectory of interest rates.

Spot gold XAU= was little changed at $2,030.62 per ounce, as of 1058 GMT, trading in a narrow $7 range in the session so far. U.S. gold futures GCcv1 eased 0.2% at $2,038.80.

The Fed's most favoured inflation gauge, U.S. PCE inflation data, is due at 1330 GMT.

"It's fair to say that the market has reduced expectations so much by now that the data probably has to disappoint quite a bit for the markets to reduce the rate cut expectation even further," said Ole Hansen, Saxo Bank's head of commodity strategy.

Fed officials this week indicated there is still some distance to cross in meeting the 2% inflation target, but the door is opening for interest rate cuts, which might likely happen later this year.

Investors have trimmed bets to three quarter-point rate cuts in the U.S. for 2024, from bets of five cuts a month ago. Higher-for-longer rates tend to discourage investment in non-yielding gold.

Spot gold was little changed on a month-on-month basis so far, after logging a 1.2% decline in January.

"We also saw this month the physical demand from India, China and the central banks has not gone away and that's still providing a floor under the market and probably also one of the reasons why gold has managed so well even though we have seen continued selling in gold ETFs," Hansen said. GOL/AS

Holdings of SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, are at their weakest levels since July 2019. GOL/ETF

In other metals, spot silver XAG= fell 0.6% to $22.33 per ounce, platinum XPT= climbed 0.3% to $880.85, and palladium XPD= rose 0.2% to $930.33.

Spot gold price in USD per oz https://reut.rs/3IgH7nV

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Mrigank Dhaniwala)

((sherinelizabeth.varghese@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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