Gold retreats as traders lock in profits before U.S. data

Gold fell on Wednesday, retreating further from last session’s near nine-month peak, as some investors locked in profits and the dollar steadied ahead of U.S. economic data that could steer the Federal Reserve’s policy tightening path.

Spot gold slipped 0.6 percent to $1,926.79 per ounce, as of 0611 GMT, after hitting its highest since late April on Tuesday. U.S. gold futures were down 0.4 percent at $1,928.40.

The dollar index held steady. A stronger dollar makes greenback-priced gold less attractive for buyers holding other currencies.

“Gold prices are lower primarily due to a technical correction after hitting highs; a steady dollar also weighed on sentiment,” said Hareesh V, head of commodity research at Geojit Financial Services.

Market focus is now on the fourth-quarter U.S. GDP data due on Thursday, which could set the tone for the Fed’s Jan. 31-Feb. 1 policy meeting.

Gold could gain if there are signs that the U.S. economy is slowing and the Fed will soon slow its tightening pace and cut interest rates, said Ilya Spivak, head of global macro at Tastylive.

“However, for prices to breach the $2,000 level, the U.S. dollar has to continue weakening.”

Most investors expect the Fed to raise rates by 25 basis points (bps) next week. The U.S. central bank slowed its tightening pace to 50 bps last month after four straight 75-bp hikes.

With lower rates translating into lesser returns on interest-bearing assets like government bonds, investors may prefer zero-yield gold.

Gold may rise into $1,956-$1,969 range, according to Reuters technical analyst Wang Tao.

Data showed on Tuesday Swiss exports of gold to countries including China, Turkey, Singapore and Thailand surged to multi-year highs in 2022.

Among other precious metals, silver dipped 0.6 percent to $23.53 per ounce and platinum lost 0.3 percent at $1,054.25.

Palladium fell 0.8 percent to $1,728.43.