BENGALURU: Gold steadied on Wednesday as traders kept their eyes glued to US inflation data that could shape the Federal Reserve’s outlook on interest rate cuts this year, although a softer dollar kept a floor under prices.

Spot gold was steady at $2,028.39 per ounce as of 9:45 am ET (1445 GMT). US gold futures were also steady at $2,033.30 per ounce. Cooler-than-expected inflation data will give more reason for the Fed to cut rates this year, which should move gold higher, said Bob Haberkorn, senior market strategist at RJO Futures.

“Right now I expect kind of a quiet session, a little bit of back and forth, but (gold) remaining positive on the day ahead of tomorrow’s data.”

US consumer inflation data is due on Thursday. Economists polled by Reuters see year-on-year inflation at 3.2% in December, but think core inflation likely fell to 3.8%, its lowest since mid-2021, A New York Federal Reserve report revealed that consumers expect a decline in inflation, while Fed Governor Michelle Bowman on Monday stated that the US central bank’s monetary policy seems “sufficiently restrictive”.

Lower interest rates reduce the opportunity cost of investing in non-yielding bullion. “If markets have to dilute bets for a March rate cut, spot gold may see a brief stint back in the sub-$2k domain,” said Han Tan, chief market analyst at Exinity Group.

“Still, bullion bulls would have no qualms restoring spot gold back above that psychologically important mark once markets get a firmer grasp on the Fed’s policy pivot.”

The dollar index ticked down about 0.2%, making greenback-priced bullion more affordable for buyers holding other currencies. In other metals, spot silver fell 0.6% to $22.86 per ounce, while platinum lost more than 1% to $920.13, and palladium rose 1.1% to $989.38.