Spot gold edged higher in thin trade on Monday, as investors covered their short-positions after the US Federal Reserve’s cautious stance on rate cuts for 2025 dragged prices to one-month lows last week.
Spot gold added 0.2% to $2,626.47 per ounce, as of 0510 GMT, trading in a narrow $11 range. US gold futures eased 0.1% to $2,641.50.
The Fed’s 25-basis-points rate cut on Dec. 18 and the cautious note struck by its economic projections and expectations of fewer cuts in 2025 pushed gold to its lowest since Nov. 18.
“We are entering the holiday mode and gold’s mainly been helped by short-covering, which started on Friday itself and there is some technical support as well,” said Ajay Kedia, director at Kedia Commodities, Mumbai.
Gold gained on softer US dollar and Treasury yields on Friday, when US economic data hinted at a slowdown in inflation.
Monthly inflation in the US slowed in November after little improvement in recent months, data on Friday showed.
The personal consumption expenditures (PCE) index rose 0.1% last month after an unrevised 0.2% gain in October.
Gold climbs after soft US inflation data
San Francisco Fed President Mary Daly and two other Fed policymakers said they felt the central bank would likely resume rate cuts next year but take their time given that the “recalibration phase” was over. Higher rates dull non-yielding bullion’s appeal.
“The next big impact is the incoming presidency of Mr. Trump and the initial presidential decrees that he might declare. This has the potential to add to market volatility and be bullish for gold prices,” said Michael Langford, chief investment officer at Scorpion Minerals.
Meanwhile, COMEX gold speculators cut net long positions by 16,251 contracts to 203,937 in the week to Dec. 17, data showed.
Spot silver rose 0.6% to $29.69 per ounce and platinum climbed 0.9% to $934.38, while palladium steadied at $922.04.
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