Gold holds steady near one-month high amid rate cut speculation
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Gold prices maintained their ground on Thursday, hovering near their highest levels since December 12. Softer U.S. core inflation data fueled expectations of further Federal Reserve rate cuts, although gains were tempered by news of a ceasefire agreement between Israel and Hamas.
Market overview: gold prices and inflation expectations
Spot gold traded at $2,696.69 per ounce as of 0733 GMT, following a session high earlier in the day. U.S. gold futures also edged up by 0.3%, reaching $2,726.60. The precious metal continues to benefit from expectations of a less restrictive Fed policy after December’s core inflation data showed a slower pace of price increases. The lack of significant surprises in headline consumer prices further bolstered the outlook for easing monetary policy.
Jigar Trivedi, a senior analyst at Reliance Securities, highlighted that progress in disinflation could encourage the Federal Open Market Committee (FOMC) to reduce rates. This dynamic would lower the opportunity cost of holding non-yielding assets like gold, increasing its appeal to investors.
Fed outlook and market sentiment
Rate cut speculation gained traction as traders priced in nearly even odds of two rate reductions by the Fed this year, with the first potentially arriving in June. While central bank officials acknowledged the data’s disinflationary signals, they also flagged uncertainties tied to the policies of President-elect Donald Trump’s incoming administration. Proposed tariffs under the Trump agenda could exacerbate inflationary pressures, further influencing monetary decisions.
Geopolitical developments and dollar movement
In the geopolitical arena, the ceasefire agreement between Israel and Hamas reduced gold’s safe-haven appeal. This development coincided with a dip in the U.S. dollar, which retreated from recent highs amid declining bond yields. The weaker dollar added further support to bullion prices, reinforcing gold’s attractiveness to non-dollar investors.
Other precious metals performance
The broader precious metals market also saw movement:
Spot silver rose by 0.5% to $30.8 per ounce, benefiting from improved industrial demand prospects.
Platinum gained 0.9%, trading at $944.54, signaling strength in the automotive sector.
Palladium, however, edged lower by 0.2%, settling at $959 amid subdued investor demand.
Looking ahead
As the market continues to digest U.S. inflation data and geopolitical developments, gold remains at the center of investor focus. The interplay of easing inflation, Fed policy expectations, and geopolitical stability will likely shape the trajectory of precious metals in the near term.
Market overview: gold prices and inflation expectations
Spot gold traded at $2,696.69 per ounce as of 0733 GMT, following a session high earlier in the day. U.S. gold futures also edged up by 0.3%, reaching $2,726.60. The precious metal continues to benefit from expectations of a less restrictive Fed policy after December’s core inflation data showed a slower pace of price increases. The lack of significant surprises in headline consumer prices further bolstered the outlook for easing monetary policy.
Jigar Trivedi, a senior analyst at Reliance Securities, highlighted that progress in disinflation could encourage the Federal Open Market Committee (FOMC) to reduce rates. This dynamic would lower the opportunity cost of holding non-yielding assets like gold, increasing its appeal to investors.
Fed outlook and market sentiment
Rate cut speculation gained traction as traders priced in nearly even odds of two rate reductions by the Fed this year, with the first potentially arriving in June. While central bank officials acknowledged the data’s disinflationary signals, they also flagged uncertainties tied to the policies of President-elect Donald Trump’s incoming administration. Proposed tariffs under the Trump agenda could exacerbate inflationary pressures, further influencing monetary decisions.
Geopolitical developments and dollar movement
In the geopolitical arena, the ceasefire agreement between Israel and Hamas reduced gold’s safe-haven appeal. This development coincided with a dip in the U.S. dollar, which retreated from recent highs amid declining bond yields. The weaker dollar added further support to bullion prices, reinforcing gold’s attractiveness to non-dollar investors.
Other precious metals performance
The broader precious metals market also saw movement:
Spot silver rose by 0.5% to $30.8 per ounce, benefiting from improved industrial demand prospects.
Platinum gained 0.9%, trading at $944.54, signaling strength in the automotive sector.
Palladium, however, edged lower by 0.2%, settling at $959 amid subdued investor demand.
Looking ahead
As the market continues to digest U.S. inflation data and geopolitical developments, gold remains at the center of investor focus. The interplay of easing inflation, Fed policy expectations, and geopolitical stability will likely shape the trajectory of precious metals in the near term.