GOLD PRICE HOVERS NEAR FRESH HIGHS AROUND $2,360 AHEAD OF US INFLATION DATA

• Gold price trades close to all-time highs with eyes on US inflation data for March.
• The US monthly headline and core CPI are projected to have increased at a slower pace of  0.3% in March.
• Escalating geopolitical tensions keeps the demand for Gold intact.

Gold price (XAU/USD) is stuck in a tight range slightly below all-time highs of $2,365 in Wednesday’s European session. Investors refrain from building fresh positions as they await the United States Consumer Price Index (CPI) data for March, which will be published at 12:30 GMT. Economists see inflation remaining stubborn due to higher Oil prices, rentals, insurance costs and portfolio management fees. 

The 10-year US Treasury yields remain subdued near 4.36%, while the US Dollar Index (DXY), which values the US Dollar strength against six major currencies, rebounded to 104.00. The US Dollar’s appeal could strengthen if the inflation data turns out hotter than expected, as it will deepen uncertainty about when the Federal Reserve (Fed) could start reducing interest rates.

This scenario also bodes well for interest-bearing assets, such as US bonds. However,  it means downside pressure for non-yielding assets such as Gold as it increases the cost of investing in them. Still, there has been an anomaly to Gold in the past few weeks as its demand remained robust despite traders paring big bets on Fed rate cut prospects for the June meeting.