Gold edges higher as dollar slips, US inflation data in focus

GOLD prices edged higher on Tuesday (Dec 12) after hitting a three-week low in the last session, as the US dollar eased, while investors awaited key US inflation data and major central bank policy meetings for interest rate clues.

Spot gold was up 0.2 per cent at US$1,985.49 per ounce as of 0113 GMT, after hitting its lowest since Nov 20 on Monday. US gold futures rose 0.4 per cent to US$2,000.60.

The US dollar index was down 0.1 per cent against its rivals, making gold less expensive for other currency holders.

Economists polled by Reuters expect US headline inflation to be flat for November, and core inflation to be steady at an annual pace of 4 per cent – well above the Federal Reserve’s 2 per cent target. The US Consumer Price Index (CPI) report is due at 1330 GMT on Tuesday.

The path US consumers expect inflation to take over the next year softened in November to the lowest level in more than two years, a New York Fed survey showed on Monday.

The Federal Open Market Committee’s two-day monetary policy meeting will end on Wednesday with its interest rate decision and the release of its summary economic projections.

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Traders widely expect the Fed to leave rates unchanged at 5.25 per cent to 5.50 per cent this week and are pricing in about a 77 per cent chance of a rate cut in May, according to CME FedWatch Tool.

Lower interest rates tend to support non-interest-bearing bullion.

The European Central Bank and the Bank of England will also conduct policy meetings on Thursday.

SEE ALSO

Gold steady ahead of central bank meetings, key US data this week

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.23 per cent to 878.54 tonnes on Monday from 880.55 tonnes on Friday.

Spot silver rose 0.1 per cent to US$22.81 per ounce, while platinum was steady at US$910.51 and palladium climbed 0.6 per cent to US$962.89 per ounce. REUTERS