Gold gains on US dollar dip, safe-haven appeal
GOLD prices rose on Friday (Jan 12), supported by a softer US dollar and escalating Middle East conflict lifting safe-haven appeal, but were set for a second weekly fall as traders reassessed hopes for early interest rate cuts in the United States.
Spot gold was up 0.3 per cent at US$2,034.06 per ounce, as at 0231 GMT. However, it has fallen 0.6 per cent so far in the week.
US gold futures rose nearly 1 per cent to US$2,038.40.
The US dollar index fell 0.1 per cent, making bullion more attractive for buyers holding other currencies.
The US and Britain launched strikes against sites linked to the Houthi movement in Yemen, while Saudi Arabia called for restraint in light of the strikes.
Data showed US consumer prices rose more than expected in December, but excluding volatile food and energy costs the pace of price increases fell to 3.9 per cent from 4 per cent on an annual basis, showing ongoing moderation in underlying price pressures.
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Chicago Fed president Austan Goolsbe signalled he’s not sure if it is enough progress for the Fed to start cutting rates, while Cleveland Fed president Loretta Mester said it would likely be too soon to cut rates in March.
The Fed is expected to hold its policy rate steady at the Jan 30 to 31 meeting. Financial markets see a 71 per cent chance that rate cuts will begin in March.
Overall, traders are betting on 150 basis points of Fed rate cuts this year, according to LSEG’s interest rate probability app, IRPR.
Investors will next look at US producer prices data due at 1330 GMT.
Spot silver rose 0.6 per cent to US$22.88 per ounce, platinum climbed 0.3 per cent to US$917.48, and palladium gained 0.3 per cent to US$991.02. REUTERS
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