Gold prices held steady on Tuesday as investors remained cautious ahead of U.S. inflation data due later in the week, which could provide more insights into the Federal Reserve's policy path.
Spot gold rose less than 0.1% to $2,029.06 per ounce after hitting its lowest level in over three weeks on Monday. U.S. gold futures also rose than 0.1% to $2,035.3 per ounce.
If inflation numbers offer an upside surprise, then the Fed may not be able to cut interest rates soon, which will bring in a bearish element for the gold and silver markets, said Jim Wyckoff, senior analyst at Kitco Metals.
Investor attention will now turn to the U.S. consumer and producer inflation reports due on Thursday, with analysts expecting the rise in prices to slow in December.
The New York (NY) Fed survey on Monday revealed that consumers expect a decline in inflation, along with more gradual increases in household earnings and spending in the coming years.
Fed Governor Michelle Bowman on Monday stated that the U.S. central bank's monetary policy seems "sufficiently restrictive".
According to the CME FedWatch Tool, market participants are pricing a 60% chance of a U.S. rate cut in March.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
Spot silver fell 0.6% to $22.96 per ounce. Platinum lost 1.7% to $929.78, and palladium fell 2% to $977.80.
"Silver will rally alongside gold with upside potential hinging on investor participation outweighing some mild contraction in industrial demand." Nicky Shiels, head of metals strategy at MKS PAMP SA said.
Palladium remains susceptible to volatility and is vulnerable to potential supply cuts; both PGMs should trade defensively in 2024, Shiels added.