• Notification Date: 23-12-2024
• Notification No: N/A

Gold Prices Rise as U.S. Inflation Eases, but Hawkish Fed Outlook Holds Back Investors

Gold prices recovered slightly in Asian trading Monday following a bumpy week that was fueled by a modest weakening in U.S. inflation but the Federal Reserve's hawkish bias leaves investors cautious. Spot gold increased 0.2% to $2,626.65 an ounce and February gold futures decreased 0.1% to $2,642.32.

Gold declined 1% last week after the Fed indicated fewer interest-rate cuts in 2025 because of the persistent concerns of inflation. That changed expectations was a part of the reason why the U.S. dollar had rallied and put gold under pressure. The precious metal fell to a one-month low mid-week as markets digested the Fed's stance on rate cuts.

The US inflation data this Friday did provide some respite. The core PCE price index is the Fed's favourite metric of inflation that rose merely 0.1 percent in November, below October's gain of 0.2 percent. The annual change in inflation softened to 2.4 percent, although below consensus estimates. So core inflation, which subtracts volatile food and energy expenses, was stubbornly placed at 2.8%, way above the Fed target of 2%.

Other precious metals did advance, however Platinum rose 0.8% to $940.15 an ounce and silver advanced 0.6% to $30.137. The U.S. dollar remained strong, close to a two-year high. The strengthening dollar puts more pressure on gold prices as the metal becomes more expensive for those holding other currencies.

Copper also edged higher in the industrial metals market that is boosted by soft U.S. inflation data and expectations of further fiscal stimulus in China which is the world's largest importer of copper. The futures of copper rose 0.3% to $8,978.50 per ton thereby showing some positive momentum amid global economic shifts.