Gold muted as traders look past Fed to focus on economic data

Gold prices were flat on Tuesday, as traders digested the U.S. Federal Reserve's policy tightening plans, while looking forward to a slew of economic data and central bank meetings to decide their next move.

Spot gold was little changed at $1,797.64 per ounce by 0440 GMT. U.S. gold futures were up 0.1% at $1,797.60.

"Gold is basically motionless, there was a bit of a correction over the past 24 hours after three days of aggressive selling," DailyFX currency strategist Ilya Spivak said.

The U.S. non-farm payroll data due later this week is important, as any signs of weak hiring and strong wage growth may significantly embolden market expectations of a hawkish Fed and in turn pressure gold to go lower, he said.

Atlanta Fed President Raphael Bostic told the Financial Times in an interview over the weekend that the Fed could super-size a rate increase to half a percentage point if inflation remained stubbornly high.

Fed funds futures late Monday had priced in just under five hikes for 2022.

Analysts at Goldman Sachs said on Friday they anticipated five rate hikes for this year, while analysts at Bank of America Merrill Lynch said they expected seven.

Although gold is considered a hedge against inflation, interest rate hikes would raise the opportunity cost of holding non-yielding bullion.

Australia's central bank signalled an end to bond buying and indicated no rush to hike interest rates on Tuesday, while markets awaited policy decisions from the Bank of England and the European Central Bank later this week.

Spot gold may test a resistance at $1,803, as it has stabilised around a support at $1,792 per ounce, according to Reuters' technical analyst Wang Tao. [TECH/C]

Spot silver was flat at $22.44 an ounce, platinum rose 0.3% to $1,020.70 and palladium fell 1.6% to $2,312.70.

 

(Reporting by Asha Sistla in Bengaluru; Editing by Rashmi Aich)