Palladium prices rose on Tuesday even as the dollar gained ground against most major rivals following inflation data, and amid optimism for global demand.

Earlier US data showed consumer prices rose 3.2% y/y in February, up from 3.1% in January, while analysts expected no change.

On a monthly basis, US consumer prices rose 0.4% last month, accelerating from 0.3% in January. 

Core prices, excluding food and energy, rose 3.8% y/y in February, slowing down from 3.9%. 

According to the Fedwatch tool, the prospects of the Fed maintaining interest rates unchanged at the June meeting rose from 28.4% to 34.6%. 

Palladium has been recently buoyed by expectations of more stimulus measures by the Chinese government to support growth.

Otherwise, the dollar index rose 0.1% as of 16:34 GMT to 103.01, with a session-high at 103.1, and a low at 102.7. 

On trading, palladium June futures rose 0.1% as of 16:35 GMT to $1,052 an ounce. 

Global oil prices rose in European trade on Tuesday for the second session off two-week lows as investors await global demand estimates from three major energy agencies. 

Traders also await initial data later today on US crude stocks from the American Petroleum Institute, expected to show a buildup for the sixth straight week.

Global Oil Prices 

US crude rose 0.8% to $78.66 a barrel, while Brent added 0.7% to $82.98 a barrel, with a session-low at $82.11.

US crude rose 0.4% on Monday away from recent two-week lows at $76.82, while Brent climbed to $81.11 away from February 28 lows. 

Global Demand Estimates

Analysts said that crude oil is currently engaged in sideways trading as traders await global demand estimates from several global energy agencies this week, which will help determine the path ahead for oil prices. 

US Stocks

Later today, initial data on US crude stocks will be released by the American Petroleum Institute, expected to show a buildup for the sixth straight week. 

The dollar rose in European trade on Tuesday against a basket of major rivals, away from recent two-month highs on active short-covering. 

The gains come ahead of major US inflation data in February, which will provide fresh pricing for the odds of a US interest rate cut in May or June.

The Index 

The dollar index rose 0.1% to 102.93, with a session-low at 102.78, after rising 0.1% yesterday, the first profit in seven sessions away from two-month lows at 102.36. 

US Rates

The markets are pricing in a 20% chance of a Fed interest rate cut in May, and a 72% chance of such a cut in June.

Traders are expecting 3 US rate cuts this year, totalling 75 basis points. 

Inflation Data

Now traders await major US inflation data for February, expected to impact the path of monetary policies taken by the Federal Reserve.

US consumer prices are expected up 3.1% y/y in February, while core prices are expected up 3.7%. 

Obviously hot inflation data will hurt the odds of early US rate cuts this year and boost the dollar further, and vice versa.

Gold prices declined in European trade for the first session in ten days, away from record highs on active profit-taking, while the dollar rebounds ahead of US inflation data.

The data will provide fresh pricing for the odds of Fed interest rate cuts in May and June, which could weigh on non-yielding assets.

Prices Today 

Gold prices fell 0.4% to $2173 an ounce, with a session-high at $2184, after rising 0.2% on Monday, the ninth profit in a row, and the longest such streak of daily gains since July 2020, while marking a record high on Friday at $2195. 

The Dollar

The dollar index rose 0.1% on Tuesday, extending gains for the second session away from two-month lows against a basket of major rivals.

A stronger dollar makes dollar-denominated gold futures costlier to holders of other currencies. 

US Rates

The markets are pricing in a 20% chance of a Fed interest rate cut in May, and a 72% chance of such a cut in June.

Traders are expecting 3 US rate cuts this year, totalling 75 basis points. 

Inflation Data

Now traders await major US inflation data for February, expected to impact the path of monetary policies taken by the Federal Reserve.

US consumer prices are expected up 3.1% y/y in February, while core prices are expected up 3.7%. 

Obviously hot inflation data will hurt the odds of early US rate cuts this year and boost the dollar further, in turn damaging gold prices, and vice versa.

 SPDR 

Gold holdings at the SPDR Gold Trust remained flat yesterday at 815.13 tonnes, the lowest since mid-2019.