Gold prices ticked up on Tuesday from a three-week low, helped by a softer dollar after an official US report showing that consumers expected lower inflation boosted hopes for interest rate cuts from the Federal Reserve.

Spot gold was up 0.2% at $2,032.73 per ounce, as of 0458 GMT, after hitting its lowest level since Dec. 18 on Monday.

US gold futures rose 0.3% to $2,038.90 per ounce.

A New York (NY) Fed report out on Monday said consumers expected lower inflation as well as weaker income and spending over the next several years.

The NY Fed survey may help to provide some support for gold as it brings “further relief to the inflation picture and has provided more room for Fed officials to consider earlier rate cuts in 2024”, said IG market strategist Yeap Jun Rong.

Gold holds steady as traders eye jobs

Lower interest rates decrease the opportunity cost of holding non-yielding bullion.

Making bullion more attractive for foreign currency holders, the dollar index ticked lower, a day after marking its biggest daily decline in two weeks.

“Given the strong rebound in risk-on sentiment overnight, gold prices have to balance a dovish rate outlook with potential safe-haven outflows as well,” said Rong.

Last week’s stronger-than-expected jobs data, coupled with the latest Fed minutes that noted an uncertainty over the timing of rate cuts, had tempered sentiment for an early policy easing in the US Market participants are pricing in an about 62% chance of a rate cut by the US central bank in March, down from a nearly 90% probability seen before the New Year, according to the CME FedWatch tool.

Investors now await Thursday’s US consumer price inflation report for further clarity on the scale and depth of Fed’s rate cuts.

Spot silver rose 0.1% to $23.11 per ounce, while platinum climbed 0.3% to $948.42, and palladium gained 0.6% to $1,003.46.