BENGALURU: Gold prices rose on Tuesday after touching a three-week low in the previous session as traders reassessed interest rate cut expectations from the Federal Reserve after a report showed consumers expect lower inflation this year.

Spot gold was up 0.3% at $2,034.70 per ounce, as of 1248 GMT, after hitting its lowest level since Dec. 18 on Monday. US gold futures rose 0.4% to $2,041.70 per ounce.

“Everybody was very optimistic that there would be a first Fed rate cut in March... but at the end of December, this somehow shifted and the economy in the US continued to show signs of strength of resilience,” said Ricardo Evangelista, senior analyst at ActivTrades. Last week’s stronger-than-expected job numbers, combined with the latest Fed minutes, which expressed ambiguity about the timing of rate reductions, dampened expectations for an early policy easing in the US.

According to the CME FedWatch Tool, the market currently expects a 60% chance of a rate cut during the Fed’s March 19-20 policy meeting. Lower interest rates reduce the opportunity cost of investing in non-yielding bullion.

The New York (NY) Fed survey released on Monday showed consumers see a decrease in inflation as well as slower gains in household earnings and spending over the next several years.

Investor focus now shifts to the US consumer and producer inflation reports due on Thursday, with analysts expecting the rise in prices to slow in December. “Gold prices remain well above $2,000/oz. The near-term trajectory appears higher... Should the Fed ‘disappoint’ on the delivery or speed of potential cuts, gold may weaken,” HSBC said in a note on Monday.

Among other precious metals, spot silver rose 0.3% to $23.14 per ounce, while platinum was down 0.4% at $942.08, and palladium fell 1% to $987.75.