Gold prices edged higher on Thursday, supported by a softer dollar ahead of a consumer inflation report due later in the day that could shed some light on the U.S. Federal Reserve’s interest rate trajectory.
FUNDAMENTALS
* Spot gold was up 0.2% at $2,028.19 per ounce, as of 0135 GMT. U.S. gold futures rose 0.3% to $2,032.80.
* The dollar index fell 0.1%, making bullion more attractive for buyers holding other currencies.
* U.S. consumer price inflation report is due at 1330 GMT. Economists polled by Reuters see year-on-year inflation at 3.2% in December, but think core inflation likely fell to 3.8%, its lowest since mid-2021.
* U.S. producer prices will be released on Friday.
* Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
* Traders are betting on 140 basis points (bps) worth of interest rate cuts by the U.S. central bank this year and a 67% chance they begin as soon as March, according to LSEG’s interest rate probability app, IRPR.* Elsewhere, Australia’s surplus on trade goods surged to an eight-month high in November as coal exports picked up and imports of cars slid after a run of strong months, data showed on Thursday.
* In wider financial markets, Japan’s benchmark Nikkei average opened 1.25% higher, while Asia-Pacific shares outside Japan fell 0.5%, on its seventh consecutive session of decline.
* Earlier this week, a New York Fed report said consumers expect a decline in inflation while Fed Governor Michelle Bowman stated that the U.S. central bank’s monetary policy seems “sufficiently restrictive”.
* Spot silver rose 0.5% to $22.96 per ounce, platinum climbed 0.2% to $920.40, and palladium gained nearly 1% to $1008.67.