Gold prices edged higher on Thursday, helped by a softer dollar and lower Treasury yields as traders looked forward to November US inflation data due out on Friday for more clues on the Federal Reserve’s monetary policy outlook.
Fundamentals
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Spot gold was up 0.2% at $2,033.92 per ounce, as of 0106 GMT. US gold futures inched lower to $2,045.70.
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Benchmark US 10-year bond yields fell to an almost five-month month low on Wednesday after British inflation plunged in November to its lowest rate in over two years.
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The dollar was down 0.1% against its rivals, making gold less expensive for other currency holders.
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A dovish tilt from the Fed in their last policy meeting has prompted traders to pencil in several rate cuts in 2024, starting as early as March.
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However, Fed officials have since been pushing back against the idea of rapid rate cuts next year.
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Philadelphia Fed President Patrick Harker said he still opposes any further central bank rate hikes, while signalling openness to lowering short-term borrowing costs, albeit not imminently.
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Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
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All eyes are now on the November core personal consumption expenditure (PCE) index report, the Fed’s preferred measure of underlying inflation.
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Data on Wednesday showed US existing home sales rose unexpectedly in November. US consumer confidence increased more than expected in December amid optimism about the labour market.
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SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.07% to 878.25 tonnes on Wednesday.
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Spot silver rose 0.4% to $24.20 per ounce, while platinum gained 0.2% to $960.52 and palladium climbed 0.7% to $1,204.15.
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