XAU/USD recovers some lost ground above $2,030, focus on Chinese CPI, PPI data

• Gold price trades in negative territory for the second consecutive week near $2,030.
• The US Consumer Price Index (CPI) report came in higher than expected on Thursday.
• Futures traders see the Federal Reserve (Fed) potentially delaying its first interest rate cut.
• Traders will monitor the Chinese CPI, and PPI on Friday.

Gold price (XAU/USD) bounces off the weekly low of $2,013 to $2,030 during the early Asian session on Friday. Nonetheless, the upside of the yellow metal might be limited due to the possibility that the Federal Reserve (Fed) may not begin cutting interest rates as early as expected, which might exert some selling pressure on gold prices.

Meanwhile, the US Dollar Index (DXY), an index of the value of the USD measured against a basket of six world currencies, rises to 102.30. The US Treasury yields edge higher, with the 10-year yield standing at 3.97%.

The US inflation report came in higher than expected on Thursday. The US Consumer Price Index (CPI) for December rose to 3.4% YoY from the previous reading of 3.1%, better than the expectation of 3.2%. On a monthly basis, the headline CPI grew 0.3% versus 0.1% prior, above the consensus of 0.2%. The Core CPI, which excludes volatile food and energy prices, climbed 3.9% YoY in December compared to the estimation of 3.8%.

The US Dollar (USD) attracts some buyers following the upbeat US data as futures traders see the Federal Reserve (Fed) potentially delaying its first interest rate cut. Chicago Fed President Austan Goolsbee said on Thursday that 2023 was a “hall-of-fame” year for falling inflation, setting the path for a couple of interest rate cuts in the United States in 2024 if the trend continued. However, New York Fed President John Williams stated that the “restrictive” monetary policy is likely to stay in place for some time.

Investors will take more cues from the Chinese economic data on Friday. The nation’s Consumer Price Index (CPI) is estimated to drop 0.4% YoY in December, while the Producer Price Index (PPI) is forecast to fall 2.6% YoY from 3.0% in the previous reading. The weaker-than-expected data might weigh on the yellow metal, as China is one of the world’s largest gold consumers. Additionally, the US PPI will be released later on Friday.