Gold prices rose slightly on Thursday, as traders await key US inflation data due later in the day to gauge the future direction of the Federal Reserve’s monetary policy.
Spot gold rose 0.2% to $2,614.00 an ounce by 0246 GMT, after falling over the past six sessions. Prices hit a record high last month.
U.S. gold futures gained 0.2% to $2,631.40.
The Consumer Price Index (CPI) for September is due at 1230 GMT and the Producer Price Index (PPI) on Friday.
“If core CPI is higher, U.S. Treasury yields will rise, which is bad for gold. I think there is room for prices to fall, but I don’t necessarily see a bearish trend in the big picture,” said Ilya Spivak, head of global macro, Tastylive. [US/]
Markets consider there to be an 80% chance that the Fed will cut its interest rate by 25 basis points in November.
At the September meeting, a “substantial majority” of Fed officials said they favored ushering in an era of looser monetary policy with a half-point rate cut, but agreed that further easing would depend on the data, according to the meeting minutes.
In the event of a major geopolitical shock triggered by the situation in the Middle East and with the Fed in an easing cycle, bullion still has a chance to hit a new record this year, Mr. Spivak said.
Zero-yielding bullion is favored in a low interest rate environment as well as in times of economic and geopolitical unrest.
Mary Daly, president of the San Francisco central bank, said one or two more rate cuts are likely this year if the economy performs as she expects. Lorie Logan, president of the Dallas central bank, called for gradual cuts and said the U.S. central bank should not rush.
At the same time, Israel’s plans to strike Iran have heightened fears of rising tensions in the Middle East.
Spot silver rose 0.3% to $30.60, platinum gained 1.4% to $958.60 and palladium firmed 1.3% to $1,052.61.
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