Gold struggled near a two-month low on Thursday, as investors assessed comments from two U.S. Federal Reserve officials on unexpectedly high January inflation that has tempered hopes for swift and deeper interest rate cuts this year.
Spot gold was flat at $1,991.70 per ounce (Oz), as of 0441 GMT, after hitting its lowest since Dec. 13 on Wednesday. U.S. gold futures were flat at $2,003.40/Oz.
"After a sharp fall in gold prices (on Wednesday), we see some consolidation. But today's (economic) data points will give more clarity," said Ajay Kedia, director at Kedia Commodities in Mumbai.
"The dollar's move would be important to watch as it may retest its highs, weakening gold prices."
The U.S. dollar index held below a three-month peak. A stronger dollar makes gold more expensive for buyers in other currencies.
Fed Vice Chair for Supervision Michael Barr backed the "careful approach" to cutting rates advocated by Chair Jerome Powell, while Chicago Fed President Austan Goolsbee warned against waiting too long.
The comments came after an upside surprise in U.S. consumer prices, which sent bullion 1.4% lower on Tuesday in its biggest daily decline since Dec. 4.
Traders are now pricing in 97 basis points (bps) of rate cuts for this year, up from about 85 bps early on Wednesday but down from over 110 bps prior to the inflation data. The first cut will likely arrive in June now.
In the near term, spot gold could fall towards the $1,950 level, "which should be a good zone to take a long position", said Kedia.
Focus is now on the U.S. retail sales data due at 1330 GMT and producer price index numbers due on Friday. At least three more Fed officials are due to speak later this week.
Among other precious metals, palladium dropped 0.5% to $929.95/Oz. It rose more than 8% on Wednesday on short-covering, regaining its premium against platinum.
Spot platinum fell 0.3% to $886.51/Oz and silver slipped 0.1% to $22.40.
