BENGALURU: Gold prices climbed on Thursday, buoyed by a softer dollar, while markets awaited a key US inflation report later in the day that could help gauge the Federal Reserve’s policy trajectory this year.
Spot gold was up 0.5% at $2,033.70 per ounce, as of 1206 GMT. US gold futures also rose 0.6% to $2,038.90.
“Gold remains range-bound ahead of the US 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.
The US consumer price inflation (CPI) report is due at 1330 GMT, and will shed further light on when the Fed could start cutting rates. US 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 US 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.
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