Gold prices edged up on Wednesday, recovering from a two-month low hit in the previous session as bargain hunters moved in and the dollar eased ahead of key US inflation data expected later today, Reuters reports.
Spot gold was up 0.4% at $2,607.59 per ounce by 10:15 GMT, while US gold futures rose 0.3% to $2,613.30.
The US Consumer Price Index (CPI) report, due at 13:30 GMT, is widely anticipated by investors who are watching for signals on inflation and its impact on future Federal Reserve interest rate decisions. The dollar index, which measures the greenback against a basket of major currencies, fell 0.1% after hitting a six-month high earlier, making gold more appealing to foreign buyers and boosting its price.
After a sharp decline following the US elections last week, gold’s rebound reflects its renewed appeal to medium-term investors.
“Gold saw a significant decline after the elections, and it’s now looking attractive again for medium-term gold bulls,” said Peter Fertig, an analyst at Quantitative Commodity Research.
Fertig added that the Federal Reserve’s recent rate-cutting trend has kept gold attractive to investors. Last week, the Fed cut rates by a quarter-point, slowing from a previous 50-basis-point cut, and there’s a 66% chance of another 25-basis-point cut at its December meeting, according to CME’s FedWatch Tool.
Lower interest rates generally enhance the appeal of gold, which does not yield interest, as they reduce the opportunity cost of holding the metal. Last week, gold registered its steepest weekly drop in five months, influenced by market reactions to Donald Trump’s election victory and its possible implications for US monetary policy.
In addition to CPI, the markets are awaiting the Producer Price Index (PPI), jobless claims, and retail sales data expected later in the week. Statements from Fed Chair Jerome Powell and other Federal Reserve officials will also be closely monitored for guidance on future rate policy.
“It would not be surprising if inflation data is not in line with expectations, and if unemployment remains low, it could prompt the Fed to consider a pause in December,” Fertig noted.
He suggested that economic indicators could sway the central bank’s policy decisions.
Other precious metals traded mixed: spot silver rose 0.6% to $30.90, platinum slipped 0.1% to $946.60, and palladium inched up 0.3% to $947.61. The market’s next move hinges on today’s CPI data release and the broader outlook for US interest rates.
