Investing.com – Gold prices slipped to a one-week low in early dealings on Thursday, as investors looked ahead to a report on U.S. personal income and spending, which includes the personal consumption expenditures inflation data, the Fed’s preferred metric for inflation, for fresh clues on the likely trajectory of monetary policy.
Comex hit an overnight low of $1,280.90 a troy ounce, their worst level since Nov. 22, before rebounding slightly to $1,282.21 by 3:00AM ET (0800GMT), little changed from the prior session’s close.
Gold prices lost 1% on Wednesday, pressured by upbeat U.S. growth data for the third quarter and Federal Reserve chair Janet Yellen’s bullish view of the economy.
The U.S. economy has picked up steam this year, growing at an annualized rate of more than 3% each of the past two quarters.
The Commerce Department released its second read on third-quarter U.S. GDP, which showed the economy expanded at an annualized rate of 3.3%, the quickest pace in three years.
Shortly after the release of the data, outgoing Fed chair Janet Yellen told Congressional leaders in her final scheduled testimony on Capitol Hill, that the U.S. economy has gathered steam this year and will warrant continued interest rate increases amid a strengthened global recovery.
The U.S. central bank is scheduled to hold its final policy meeting of the year on Dec. 12-13, with interest rate futures pricing in a 100% chance of a rate hike at that meeting, according to Investing.com’s Fed Rate Monitor Tool.
However, markets appeared doubtful over the central bank’s ability to raise rates as much as it would like next year due to concern over the sluggish inflation outlook.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
Looking ahead, Thursday’s calendar features data on personal income and consumer spending for October, which include the personal consumption expenditures (PCE) inflation data, the Fed’s preferred metric for inflation, at 8:30AM ET (1330GMT).
The consensus forecast is that the report will show that the core PCE price index inched up 0.2% last month. On an annualized basis, core PCE prices are expected to rise 1.4%.
The Fed uses core PCE as a tool to help determine whether to raise or lower interest rates, with the aim of keeping inflation at a rate of 2% or below.
Meanwhile, U.S. tax reform stayed in focus. Congressional Republicans scrambled on Wednesday to reformulate their tax bill to satisfy lawmakers worried about how much it would expand the federal deficit, as the measure moved toward a U.S. Senate floor vote later this week.
A lack of clear drivers has kept gold between $1,265 and $1,300 an ounce throughout November, its narrowest monthly range in 12 years. Still, bullion is heading for its first monthly gain since August, having risen 1% in November.
In other metals trading, inched up 2.0 cents, or 0.1%, to $16.47 a troy ounce, platinum added 0.5% to $946.20, while palladium inched up 0.4% at $1,012.77 an ounce.
Meanwhile, slipped 0.3 cents, or 0.1%, to $3.065 a pound, as concerns over demand in top consumer China pushed investors to sell the red metal.
Source: Investing.com
