Gold bars and gold coins of different sizes lie in a safe on a table at the precious metal dealer Pro Aurum.
Sven Hoppe | Picture Alliance | Getty Images
Gold prices climbed on Thursday, buoyed by a softer dollar, while markets awaited a key U.S. inflation report later in the day that could help gauge the Federal Reserve’s policy trajectory this year.
Spot gold was up 0.4% at $2,031.83 per ounce, as of 0942 GMT. U.S. gold futures also rose 0.4% to $2,036.60.
“Gold remains range-bound ahead of the U.S. CPI print with key support around $2010, while a break above $2045 is needed to offer fresh momentum,” said Ole Hansen, Saxo Bank’s head of commodity strategy.
Market focus now turns to the U.S. consumer price inflation (CPI) report due at 1330 GMT, which will shed further light on when the Fed could start cutting rates. U.S. producer prices will be released on Friday.
A Reuters poll sees year-on-year inflation at 3.2% in December, while core inflation likely fell to 3.8%, its lowest since mid-2021.
Traders are betting on 140 basis points (bps) of interest rate cuts by the U.S. central bank this year and a 69% chance they begin as soon as March, according to LSEG’s interest rate probability app, IRPR.
“These money market expectations manifest themselves in quite a bullish mood in the gold futures market, where short-term and speculative traders are still strongly positioned for higher prices,” Manuel Villegas, digital assets analyst at Julius Baer, said in a note.
“In our view, however, a recession would be required to lure safe-haven seekers back into the gold market. Against this backdrop, we stick to our cautious view on gold.”
The dollar index fell 0.2%, on its second session of decline, making greenback-priced bullion more attractive for buyers holding other currencies.
Higher interest rates raise the opportunity cost of investing in non-yielding bullion.
