Gold hovers near two-week peak as focus shifts to US inflation data

GOLD prices remained mostly unchanged on Tuesday (Dec 3), staying near a two-week high hit in the previous session, as investors awaited key US inflation data, due later this week, for further insights into the Federal Reserve’s interest rate outlook.

Spot gold held its ground at US$2,660.82 per ounce, as at 0042 GMT. US gold futures were steady at US$2,683.60.

Gold hit a two-week high on Monday, supported by renewed buying of the metal by China’s central bank following a six-month hiatus.

Traders are now focused on the November US consumer price index, due on Wednesday, following last week’s stronger-than-expected payrolls report. Markets now price in an 85.8 per cent chance of a quarter-point rate reduction at the Fed’s Dec 17 to 18 meeting, up from 68 per cent before the jobs data.

Last month, US consumers were bracing for higher levels of inflation in coming years even as they marked up expectations that their personal financial situations would improve markedly, the New York Federal Reserve reported on Monday.

Also on investors’ radar is the European Central Bank policy meeting on Thursday, where a quarter-point rate cut is expected.

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Gold, which pays no interest, tends to benefit when interest rates fall as this reduces the opportunity cost of holding bullion.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.13 per cent to 870.79 tonnes on Monday from 871.94 tonnes on Friday.

Meanwhile, the United States and Britain on Monday announced a new wave of sanctions targeting what it said was the illicit gold trade, which the United Kingdom said was financing Russian President Vladimir Putin’s war efforts in Ukraine and fuelling corruption.

Spot silver gained 0.3 per cent to US$31.90 per ounce, platinum added 0.3 per cent to US$941.90 and palladium rose 0.3 per cent to US$976.29. REUTERS