Gold inches higher on hope Fed has finished its hiking cycle

Bengaluru — Gold prices inched higher on Thursday, buoyed by the expectation that the Federal Reserve has come to the end of its tightening cycle, though a rebound in the dollar kept gains in check.

Spot gold gained 0.1% to $1,961.81/oz, at 3.15am GMT. US gold futures were flat at $1,964.60.

“Gold’s volatility has receded following the excitement after the US inflation report, and it looks quite comfortable around $1,960 despite the US dollar’s attempt to recoup some of its losses,” City Index senior analyst Matt Simpson said.

“So without any fresh catalyst, [gold] seems to lack any major driver for a move today,” Simpson added.

The dollar extended gains against its rivals after robust US economic data, making gold more expensive for overseas buyers.

US producer prices fell by the most in three-and-a-half years in October amid a sharp drop in the cost of gasoline, the latest indication of subsiding inflation pressures, while retail sales fell for the first time in seven months.

On Tuesday, data showed US headline consumer prices were flat in October, against expectations for a 0.1% rise. Core consumer inflation, at 0.2%, also came in below a forecast of 0.3%.

Signs of slowing inflation boosted bets among investors that the US central bank is done with its rate-hike campaign.

Traders widely expect the Fed to leave rates unchanged in December and bet it will start cutting rates by May, according to the CME FedWatch tool.

Lowering interest rates boosts gold’s appeal, a non-yielding bullion used as a hedge against inflation.

“Increasing conviction around the narrative of ‘higher-for-longer’ rates is tarnishing the investment appeal of gold in the near term,” ANZ analysts said in a note.

“Nevertheless, we see strategic buying emerging after the recent price correction as long-term drivers remain in place.”

Elsewhere, spot silver fell 0.4% to $23.36/oz, while platinum dipped 0.6% to $890.95. Palladium lost 0.8% to $1,022.93/oz.

Reuters