NEW YORK (CNBC) - Gold prices eased in a tight range on Wednesday as the U.S. dollar firmed, although bullion was not far from a one-week high scaled in the previous session as traders looked ahead to impending economic data later this week.
Spot gold fell 0.3% to $1,812.18 per ounce, after rising more than 1% on Tuesday on the back of a dip in the dollar. U.S. gold futures eased 0.2% to $1,821.70.
“After yesterday’s sharp rally, traders are waiting for fresh cues, especially from tomorrow’s GDP data and the performance of U.S. dollar,” said Hareesh V., head of commodity research at Geojit Financial Services.
Reports of a surge in Covid-19 cases in China may be another trend setter for the market, he said, adding prices are most likely to be choppy, possibly between $1,760 and $1,840.
The dollar index was firm on the day after a yen driven fall in the last session following a Bank Of Japan surprise policy tweak.
On the data front, the U.S. gross domestic product (third estimate) due on Thursday and the core personal consumption expenditure (PCE) price index scheduled on Friday are also on the investors’ radars.
Gold prices have risen nearly $200 since falling to a more than two-year low in late September as expectations around slower rate hikes from the Fed dented dollar’s allure.
“As we head into 2023, the Federal Reserve is expected to pivot in its rate hiking drive and the dollar is likely to soften, benefiting gold due to the inverted price correlation between the two assets,” Ricardo Evangelista, senior analyst at ActivTrades said.
While gold is traditionally considered a hedge against inflation it tends to loose its shine in a higher interest rate environment.