GOLD prices edged higher on Tuesday (Jan 9), supported by a pullback in the US dollar after an official US report citing consumers expect lower inflation cemented bets for interest rate cuts from the Federal Reserve.

Spot gold was up 0.2 per cent at US$2,032.39 per ounce, as at 0157 GMT, after hitting a three-week low on Monday.

US gold futures also rose 0.2 per cent to US$2,038.30 per ounce.

A New York Federal Reserve report on Monday said consumers expect lower inflation as well as weaker income and spending over the next several years.

Fed governor Michelle Bowman retreated from her persistently hawkish view, saying she now sees US monetary policy as “sufficiently restrictive” and signalled her willingness to support eventual interest-rate cuts as inflation eases.

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

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The US dollar index weakened 0.1 per cent, making bullion more attractive for other currency holders.

Earlier this month, a stronger-than-expected jobs data paired with the latest Fed minutes that noted an uncertainty over the timings of rate cuts, tempered some sentiments for an early interest rate cut in the US.

Market participants are pricing in an about 62 per cent chance of a rate cut by the US central bank in March, down from a nearly 90 per cent 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 the Fed’s rate cut.

Asia’s stock indexes were mostly higher on Tuesday after a tech-led surge on Wall Street.

Meanwhile, core inflation in Japan’s capital slowed for the second straight month in December, taking some pressure off the central bank to rush into exiting ultra-loose monetary policy.

Spot silver rose 0.1 per cent to US$23.11 per ounce, while platinum climbed 0.5 per cent to US$950.08, and palladium gained 0.5 per cent to US$1,002.76. REUTERS