Gold prices edged lower on Thursday after rising more than 2% in pre-trade as the dollar strengthened ahead of a key inflation report later this week, which could provide further clues about the trajectory of US interest rates.
basics
* Spot gold fell 0.4% to $4,961.57 an ounce by 0112 GMT, after rising 2.1% in the previous session.
* U.S. gold futures for April fell 0.6% to $4,981.
– The dollar hit its highest level in more than a week, making dollar-denominated bullion even more expensive for holders of other currencies.
Traders said markets in mainland China, Hong Kong, Singapore, Taiwan and South Korea were closed for the Lunar New Year holiday, resulting in low volume and potentially volatile price movements.
– U.S. Federal Reserve policymakers almost unanimously agreed to keep interest rates on hold at a meeting last month, but are divided on next steps, with some policymakers willing to raise rates if inflation remains high, while others are more likely to support further rate cuts if inflation recedes.
*The market currently expects three 25 basis point rate cuts this year, according to CME’s FedWatch tool.
*Investors are now awaiting the weekly jobless claims report later in the day and personal consumption expenditures (PCE) data, the Fed’s preferred measure of inflation, to be released later in the day for further clues on monetary policy. Non-yielding bullion tends to do well in low interest rate environments.
* Gold rose more than 2% on Wednesday on demand for safe-haven assets after two days of peace talks between Ukraine and Russia ended without progress in Geneva. Ukrainian President Volodymyr Zelenskiy said he was dissatisfied with the results, but the U.S. government reported “significant progress.”
* Spot silver fell 0.5% to $76.83 an ounce after falling more than 5% on Wednesday.
* Spot platinum fell 0.1% to $2,069.35 an ounce and palladium fell 0.5% to $1,707.53.
Data/Events (GMT) 1330 US International Trade December 1330 US Initial Unemployment CLM Weekly 1330 US Philadelphia Fed Business Index February 1500 EU Consumer Confidence Flash Feb (Reporting by Ishaan Arora; Editing by Subhranshu Sahu)
