Gold prices experienced an uptick on Thursday, buoyed by a weakened dollar and declining Treasury yields, with traders closely monitoring U.S. economic data for insights into the Federal Reserve’s monetary policy stance.
As of 0442 GMT, spot gold saw a 0.4% increase, reaching $2,036.60 per ounce, while U.S. gold futures recorded a 0.1% rise to $2,048.60.
The benchmark U.S. 10-year bond yields hovered near a five-month low touched on Wednesday, following a significant drop in British inflation in November to its lowest rate in over two years.
The dollar displayed a 0.1% decrease against its rivals, contributing to gold’s appeal by making it more affordable for holders of other currencies.
Kyle Rodda, a financial market analyst , noted, “Gold remains supported by the prospect of a global rate-cutting cycle, chiefly in the U.S.” Rodda also highlighted potential technical considerations, stating, “From a technical standpoint, prices have lost momentum; there’s the risk we get a short-term pullback, especially given the recent pushback from Fed officials about the prospect for cuts next year and the potential overbought nature of bonds.”
The dovish stance adopted by the Fed in their recent policy meeting led traders to anticipate multiple rate cuts in 2024, potentially starting as early as March. However, Fed officials have since voiced resistance to the idea of rapid rate cuts next year. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Market attention now turns to the U.S. third-quarter GDP report and weekly jobless claims data later in the day, ahead of the eagerly anticipated November Core Personal Consumption Expenditure (PCE) index report, set to be released on Friday. The PCE index is the Fed’s preferred gauge of underlying inflation.
Recent data showed unexpected increases in U.S. existing home sales in November, coupled with higher-than-expected consumer confidence in December, driven by optimism about the labor market.
In the broader precious metals market, spot silver rose by 0.6% to $24.28 per ounce, platinum gained 0.8% to $965.94, and palladium climbed 0.4% to $1,200.73. These movements highlight a broader positive sentiment across the precious metals spectrum.
