Gold edges down as dollar gains as markets eye US data

Gold prices have edged lower as the US dollar gained, though bullion remained near record-high levels as traders awaited more economic data out of the US that could steer hopes for a mid-year rate cut by the Federal Reserve.

Spot gold fell 0.2 percent to $2,171.05 per ounce as of 0426 GMT. US gold futures also dipped 0.2 percent to $2,175.40.

The US dollar index gained 0.1percent. A firmer dollar makes gold more expensive for other currency holders.

Investors await US retail sales data, the producer prices index (PPI) report and jobless claims due later in the day to gauge the US economy's health and if it will deter the Fed from cutting rates in June.

"There was a mini pullback in gold prices after US CPI data release, but it doesn't change the market's view by much on U.S. monetary policy, and with today's PPI data - if the core annual figure reading appears near expectations, I still reckon that gold price could remain supported," Kelvin Wong, a senior market analyst for Asia Pacific at OANDA, said.

'Dot plot' projections

Traders see a 67 percent chance of a June rate cut, according to LSEG's interest rate probability app, down from 72 percent before data suggested some stickiness in inflation.

The Fed will release its latest 'dot plot' projections at its policy meeting next week. The December meeting projected three-quarter-point rate cuts for 2024.

Other catalysts that could move gold prices could be further bad news on China's housing market and its local government funding mechanism, and trends in consumer demand, Nicholas Frappell, global head of institutional markets at ABC Refinery, said. Frappell expects official sector demand to remain supportive for gold prices this year.

Spot platinum fell 0.3 percent to $935.50 per ounce, palladium shed 0.3 percent to $1,056.24 and silver dropped 0.3 percent to $24.95, after hitting a more than four-month high earlier in the session.