KONTAN.CO.ID - JAKARTA. Gold prices edged higher on Tuesday as the dollar weakened, with bullion's near-term trajectory likely hinging on U.S. economic data due this week that could influence the Federal Reserve's interest rate strategy. Spot gold was up 0.2% at $1,935.04 per ounce, as of 0606 GMT. U.S. gold futures gained 0.4% at $1,935.60. Key hubs such as China and Hong Kong remain closed for the Lunar New Year holidays.
The dollar index dipped 0.2%, making greenback-priced bullion more affordable for many buyers. Investors awaited the U.S. fourth-quarter GDP growth estimates due on Thursday. Read Also: Oil Prices Rise on Stronger China Outlook "Any signs of a weaker U.S. economy will be taken as a reason for the Fed to tighten less aggressively, and that could support gold, which would also take in safe haven flows," said Matt Simpson, a senior market analyst at City Index. "Disappointing numbers likely to help gold climb above $1,960, but might not break through $2,000 in its first attempt, given the significance of the number." Traders are mostly pricing in a 25-basis-point (bp) rate hike by the Fed at its Jan. 31-Feb. 1 policy meeting, after slowing its pace to 50 bps in December, following four straight 75-bp hikes. Lower interest rates tend to be beneficial for bullion, decreasing the opportunity cost of holding the non-yielding asset. Read Also: Apple Targets Raising India Production Share to Up to 25% On the physical front, India is expected to slash import duty on gold, which could lift retail sales ahead of peak demand season in the world's second-biggest bullion consumer.
