Gold prices slipped to a two-month low on Monday, after strong US economic data stoked fears that the Federal Reserve would deliver more interest rate hikes to bring down inflation.
Spot gold eased 0.1% to $1,808.51 per ounce, as of 0541 GMT.
US gold futures were down at $1,815.00.
Data on Friday showed US consumer spending shot up 1.8% last month, the largest increase since March 2021, while the personal consumption expenditures price index, the Fed’s preferred inflation measure, rose 0.6% after gaining 0.2% in December.
“A two-year high consumer spending coupled with robust job numbers released earlier this month would give confidence to the Fed to boost rates to tackle inflation,” said Hareesh V, head of commodity research at Geojit Financial Services.
Gold is seen as a hedge against inflation, but rising rates dull its appeal by increasing the opportunity cost of holding the non-yielding asset.
US Treasury Secretary Janet Yellen told Reuters on Saturday that new data showing inflation jumped unexpectedly in January signalled the fight against inflation “is not a straight line” and more work was needed.
“It’s going to take more effort on the part of the Fed to get inflation on that sustainable downward path to 2%,” Cleveland Fed President Loretta Mester said on Friday.
Gold prices hit their highest since April 2022 earlier this month, but have since lost about $150 after a slew of US data pointed to a resilient economy and a tight labour market.
Money markets expect the Fed’s target rate to peak at 5.408% in September from a current range of 4.50% to 4.75%.
The dollar index was near a seven-week peak, making bullion more expensive for buyers holding other currencies.
Spot silver shed 0.9% to $20.58 per ounce and platinum fell 0.3% to $906.94, while palladium rose 0.9% to $1,415.96.
