Gold prices rose more than 1% on Thursday on short covering, after hitting a one-month low earlier in the session, as the market awaits key US data for further clues about the trajectory of Federal Reserve policy.
Spot gold gained 0.8% to $2,607.88 an ounce by 0251 GMT. However, US gold futures were down 1.2% at $2,620.60.
“Very short-term speculators are looking for opportunities to buy the dips and gold’s gain is due to short covering after the metal touched the psychological $2,600 level yesterday,” Kelvin said Wong, OANDA’s senior market analyst for Asia Pacific.
“If the US Personal Consumption Expenditure (PCE) data is as expected, it shouldn’t be a big surprise. But in the event it hits 3% and above, we could see further pressure on gold.”
Traders are now awaiting key U.S. GDP data, early unemployment claims later today and core PCE data later in the week for more insight into the rate cut trajectory of the economy. Fed by 2025.
Gold fell more than 2% to its lowest level since November 18, after the Fed cut rates by 25 basis points as expected but indicated it would make fewer cuts. rate by the end of 2025.
Fed Chairman Jerome Powell said central bank policymakers want to see more progress in reducing inflation when they consider the path of future rate cuts, as inflation has exceeded projections for end of the year.
Markets now expect the Fed to leave its benchmark overnight rate unchanged at the January 28-29 meeting.
Higher rates reduce the incentive to hold this asset without yield.
Spot silver rose 0.3% to $29.44 an ounce, platinum rose 0.6% to $924.65 and palladium gained 1% to $912.70.
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