During the early Asian trading hours on Thursday, the price of gold (XAU/USD) experienced a slight upward drift. The weakened US Dollar (USD) provided some support to the precious metal ahead of the anticipated US Consumer Price Index (CPI) report later in the day. As of the latest update, gold is trading at $2,026, reflecting a 0.15% gain for the day.
Simultaneously, the US Dollar Index (DXY), measuring the USD against a basket of weighted currencies, dipped to 102.35. US Treasury yields also showed a marginal decrease, with the 10-year yield standing at 4.03%.
Federal Reserve (Fed) Bank of New York President John Williams, in remarks on Wednesday, cautioned against premature calls for rate cuts. Williams highlighted the ongoing challenges in achieving the Fed’s inflation target of 2%. He emphasized the need for a sustained restrictive policy stance to attain the central bank’s objectives, with monetary policy decisions being contingent on incoming data, evolving outlook, and risk considerations.
The Fed, maintaining interest rates unchanged at its December meeting, outlined a plan for three quarter-percentage-point rate hikes by the end of 2024. The recently released minutes from that meeting did not provide insight into a specific timetable for the rate adjustments. Traders are closely watching the upcoming US inflation report on Thursday for potential market-moving developments. Economists anticipate a rise in inflation for December, raising questions about the prevalent expectation for Fed interest rate cuts in the current year.
Looking ahead, the US Consumer Price Index (CPI) is slated for release later on Thursday, with estimates projecting a 0.2% month-on-month increase for headline inflation and a 0.3% rise for core CPI in December. Additionally, the weekly Initial Jobless Claims will be disclosed on the same day. The focus will shift to Chinese economic data on Friday, with attention on the Consumer Price Index (CPI), Producer Price Index (PPI), and Trade Balance figures.
