Gold falls over 1% as dollar firms, investors await US inflation data

Gold prices fell over 1 per cent to its lowest level in more than a week on Thursday, as the US dollar firmed, while investors awaited a key inflation print that could offer clues on the Federal Reserve's monetary policy.

Spot gold fell 1.2 per cent to $2,880.79 an ounce by 0910 GMT, its lowest since February 17. Prices hit a record peak of $2,956.15 on Monday, driven by safe-haven flows. 

US gold futures lost 0.7 per cent to $2,909.30.

The dollar index rose 0.2 per cent to move further from the recent 11-week lows, making greenback-priced bullion more expensive for other currency holders. [USD/]

 

US President Donald Trump raised hopes for another month-long pause on steep new tariffs on imports from Mexico and Canada, saying they could take effect on April 2, and floated a 25 per cent "reciprocal" tariff on European cars and other goods.

This uncertainty "sent investors rushing towards the dollar's embrace, enforcing fresh pressure on gold, which was already experiencing profit-taking from record highs," said Lukman Otunuga, senior research analyst at FXTM.

Investors are also looking for cues on US monetary policy, with several officials due to speak later in the day and the Personal Consumption Expenditures (PCE) index due on Friday. The consensus forecast was for a PCE monthly index of 0.3 per cent, unchanged from December 2024, according to a Reuters poll.

Markets expect the Fed to deliver at least two rate cuts this year, with about 55 basis points of easing priced in for 2025.

"Any major changes to these (rate) bets could trigger heightened levels of volatility for the zero-yielding metal. A combination of geopolitical risk and Trump's tariff drama could keep gold bulls in the game," Otunuga said.

Spot silver retreated 0.7 per cent to $31.62 an ounce, platinum added 0.2 per cent to $967.30 and palladium firmed 0.1 per cent to $927.50.