NEW YORK: Gold prices rose on bargain buying on Wednesday after the metal dropped to its lowest in nearly two months in the previous session and as the dollar paused ahead of upcoming US inflation data and remarks from Federal Reserve officials.
Spot gold was up 0.4% at $2,607.99 per ounce by 1133 GMT, after hitting its lowest since Sept. 20 on Tuesday. US gold futures rose 0.3% to $2,613.90.
The US dollar index was down 0.1% after having climbed to its highest in over six months against major currencies. “Gold saw a significant decline after the elections and it’s now looking attractive again for medium-term gold bulls… they (Fed) are still on the path to cut rates, but remember also that they have already slowed from 50 bps (basis points) to 25 bps,” said Quantitative Commodity Research analyst Peter Fertig. The Fed cut interest rates by a quarter of a percentage point last week. Traders now see a 62% chance of a 25-bp cut in the central bank’s December meeting, versus 70% a week ago, according to the CME’s FedWatch Tool. Lower rates boost the appeal of holding gold, which yields no interest.
Last week, bullion logged its steepest weekly decline in over five months, as markets absorbed the implications of Donald Trump’s victory and its potential impact on US =rate expectations. Market focus is now on the US Consumer Price Index (CPI) data, due at 1330 GMT. Producer price index (PPI), jobless claims, and retail sales are also due this week along with remarks from Fed Chair Jerome Powell and other US central bank officials.
“It would not be surprising if the inflation data is not coming in as they expect and the unemployment rate remaining at a low level might mean that they (Fed) also make a pause in December,” Quantitative Commodity’s Fertig said. On Thursday, spot silver rose 0.5% to $30.87, platinum fell 0.2% to $945.59 and palladium gained 0.7% to $950.58.
Source: Brecorder
