Gold gains on prospects of US Fed rate cuts next year
GOLD prices inched higher in holiday-thinned trade on Tuesday (Dec 26), helped by a weaker US dollar and lower bond yields on rising prospects of interest rate cuts by the Federal Reserve as early as March next year.
Spot gold was up 0.2 per cent at US$2,056.80 per ounce, as at 0118 GMT.
US gold futures were steady at US$2,068.60 per ounce.
The US dollar index fell 0.1 per cent, making gold more attractive for other currency holders, while benchmark US 10-year bond yields edged lower to 3.9 per cent.
Data on Friday showed that US prices fell in November for the first time in more than 3½ years, pushing the annual increase in inflation further below 3 per cent, and boosting financial market expectations for an interest rate cut from the Fed next March.
Traders are now pricing in an 88 per cent chance for a rate cut by the US central bank in March, according to the CME FedWatch tool.
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Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
Meanwhile, data out on Tuesday showed that Japan’s jobless rate was unchanged at 2.5 per cent in November from the previous month, while business-to-business service inflation was steady at 2.3 per cent last month.
Spot silver rose 0.3 per cent to US$24.23 per ounce, while platinum was steady at US$970.63. Palladium climbed 0.8 per cent to US$1,212.34.
Markets in Australia, New Zealand, Hong Kong and the eurozone are closed on Tuesday for the Boxing Day public holiday. REUTERS
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