Gold Steady After Hitting 8-Month High Ahead Of Inflation Data: What Traders Expect From Fed In Feb

Ahead of the release of U.S. inflation data on Thursday, which could drive the Federal Reserve's policy decisions, gold prices held steady after hitting an eight-month peak on Wednesday.

Spot gold was steady at $1,883.95 per ounce at the time of writing. The SPDR Gold MiniShares Trust GLDM has gained 8.72% in the last six months while the iShares Gold Trust IAU gained 8.67%.

Traders expect a 77% chance the central bank will raise the benchmark rate by 25 bps to 4.50%-4.75% in February and see rates peaking at 4.92% by June, according to Reuters.

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Expert Take: Jim Wyckoff, senior analyst at Kitco Metals said prices were trending lower on some "profit-taking from the shorter-term futures traders ahead of the CPI report tomorrow," according to the Reuters report. He added that the market could continue to trade sideways ahead of the data.

Craig Erlam, a senior market analyst at OANDA said this could be a big report “if we get another good reading that shows inflation falling faster than anticipated," the report said.

While concerns linger over the scale and impact of the COVID-19 outbreak in top gold consumer China, "over the longer term, China is expected to bounce back strongly, which could stimulate additional demand," Erlam added.

Fed Comments: Increasing number of Federal Reserve officials are sounding less hawkish ahead of the next FOMC meeting scheduled in February.

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