Gold firmer as traders await US inflation data for Fed clues
Mon Dec 09 2024
Gold prices gained on Monday as investors awaited US inflation data due this week for clues on the Federal Reserve’s next monetary policy moves. Spot gold was up 0.5% at $2,644.91/oz 2.38am GMT. Bullion fell nearly 1% last week. US gold futures added 0.3% to $2,666.80.
Gold is supported by headlines that China’s central bank is back to purchasing gold in November which could be “good news for gold bulls” in knowing that they have the People’s Bank of China (PBOC) behind their back to underpin some strength for bullion prices, IG market strategist Yeap Jun Rong said. Top consumer China resumed buying gold for its reserves in November after a six-month pause.
Traders are now looking forward to US inflation data due on Wednesday. “The inflation read may determine if we will have a hawkish cut from US policymakers next week, which could still see the US dollar stronger and gold prices weaker if the Fed were to set the stage for a pause in the rate-cutting process into early-2025,” Yeap said.
According to the CME Group’s FedWatch Tool, markets currently see an 83.4% chance of a 25 basis point (bp) rate cut this month. Lower rates decrease the opportunity cost of holding non-yielding bullion.
Federal Reserve officials appeared on track to cut interest rates this month after data showed the US labour market remained strong but continued to cool in November.
On the geopolitical front, Syrian rebels seized the capital Damascus unopposed on Sunday after a lightning advance that sent President Bashar al-Assad fleeing to Russia after a 13-year civil war and six decades of his family’s autocratic rule. Gold is often seen as a safe-haven asset during times of economic or political uncertainty.
Spot silver gained 0.4% to $31.08/oz, platinum rose 0.5% to $934.75 and palladium added 0.7% to $963.00.