Gold hovers near one-week low; US data, ECB in focus

GOLD prices languished near a one-week low on Thursday (Jan 25) as the US dollar and bond yields strengthened after a strong reading of United States business activity, ahead of US GDP data and the European Central Bank’s (ECB) policy meeting later in the day.

Spot gold rose 0.2 per cent to US$2,015.99 per ounce by 0203 GMT, after hitting a near one-week low of US$2,011.06 in the previous session.

US gold futures were flat at US$2,015.80.

US business activity picked up in January and inflation appeared to abate, with a measure of prices charged by companies for their products falling to the lowest level in more than 3½ years, suggesting that the economy kicked off 2024 on a strong note.

The US dollar index rose 0.1 per cent, hovering near a six-week high.

Yields on benchmark US 10-year Treasury notes edged slightly lower but were not far from a more than one-month high of 4.1980 per cent touched last week.

On Wednesday, MSCI’s global equity index rose to hit its highest level in almost two years, backed by positive earnings and economic data in both Europe and the United States as well as optimism that Chinese stimulus will support its stock markets.

Money market pricing shows traders are betting on five quarter-point rate cuts for 2024 in the US, down from six cuts two weeks ago.

The first cut, initially expected in March, is now expected in May with an 86 per cent probability, according to LSEG’s interest rate probability app IRPR.

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Gold steadies as traders brace for US economic data

Lower interest rates decrease the opportunity cost of holding bullion.

Investors are now awaiting the first reading of the US fourth-quarter GDP due at 1330 GMT, the ECB’s policy meeting at 1515 GMT, and another inflation reading – the personal consumption expenditure data – on Friday.

Spot silver rose 0.3 per cent to US$22.74 per ounce, platinum rose 0.1 per cent US$899.69, and palladium fell 0.2 per cent to US$960.89. REUTERS