Gold prices nudged higher to touch a two-week peak on Wednesday, supported by escalating geopolitical tensions and expectations of another rate cut by the Federal Reserve next week, ahead of a closely watched U.S. inflation report.
FUNDAMENTALS
* Spot gold was up 0.1% at $2,696.82 per ounce, as of 0023 GMT. U.S. gold futures rose 0.3% to $2,726.00.
* Investors are eyeing the U.S. Consumer Price Index (CPI) due later in the day, which could help set expectations for monetary policy in the coming year, and the Producer Price Index (PPI) on Thursday.
* With two U.S. rate reduction so far this year, traders predict an 86% chance of a further 25-basis-point cut at the Fed’s Dec. 17-18 meeting, according to the CME FedWatch tool. * The U.S. Fed is likely to cut interest rates by 25 basis points on Dec. 18, according to 90% of economists polled by Reuters, with most expecting a pause in late-January amid concerns over inflationary risks.
* On the geopolitical front, the Israeli military said it struck most of the strategic weapons stockpiles in Syria and hit two Syrian navy facilities.
* Gold is considered a safe investment during economic and geopolitical turmoil and tends to thrive in a low-interest-rate environment.
* Central bank buying, monetary policy easing, and geopolitical tensions have propelled gold to multiple record highs this year, putting the metal on track for its best performance since 2010, with a nearly 31% increase so far.
* Goldman Sachs on Tuesday reiterated its bullish stance on gold prices and pushed back on the argument that bullion cannot rally to $3,000 per ounce by end-2025 in a world where the dollar stays stronger.
* Spot silver added 0.1% to $31.93 per ounce, platinum steadied at $943.15 and palladium rose 0.4% to $971.44.