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U.S. January CPI report due on Tuesday
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Palladium drops to a near 3-year low
Feb 13 (Reuters) - Gold prices dipped on Monday as investors braced for much awaited U.S. January consumer price index data that could steer the Federal Reserve's rate-hike strategy.
Spot gold fell 0.5% to $1,854.79 per ounce by 1:42 p.m. ET (1842 GMT), while U.S. gold futures settled 0.6% lower at $1,863.50.
Gold was "a little lower heading into tomorrow morning's (CPI) number," said Bob Haberkorn, senior market strategist at RJO Futures.
All eyes are on U.S. CPI data due at 8:30 a.m. ET on Tuesday, expected to have climbed 0.4% in January. Revisions to the previous data showed consumer prices rose in December instead of falling as previously estimated.
Inflation numbers could come in a little less than what's expected, if not in line with them, while a miss in expectations could lead to a buying opportunity for gold, highlighted Haberkron.
Markets have raised the profile for future tightening by the Fed, with rates seen peaking at around 5.15% and with cuts coming later and slower.
Fed Governor Michelle Bowman said the Fed will need to continue to raise interest rates in order to get them to a level high enough to bring inflation back down.
Gold is highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion. However, the dollar index was 0.3% lower, while benchmark 10-year Treasury yields were down after they hit their highest level since early January earlier in the session, reducing the pressure on gold prices.
Spot silver fell 0.4% to $21.91 per ounce, platinum gained 1% to $954.32.
Palladium rose 1.8% to $1,569.53 after falling to a near three-year low earlier in the session.
"Given the downside risk to autocatalyst demand from potential recessions, the palladium price could continue lower," said Heraeus analysts in a note.
(Reporting by Seher Dareen and additional reporting by Bharat Govind Gautam in Bengaluru; Editing by David Holmes and Shailesh Kuber)
