Steady gold hangs on to February’s gains

Bengaluru — Gold prices remained steady on Thursday, and have held ground so far in February, despite bleak hopes for swift and deeper rate cuts in the US as traders await a key US inflation reading due later in the day.

Spot gold was steady at $2,035.78/oz, at 4.19am GMT. US gold futures edged 0.1% higher to $2,044.20.

“The personal consumption expenditures [PCE] data is significant, with an upside surprise bringing downside risk for gold ... bullion is range-trading at the moment and it's a surprise that it's holding up this well,” said Kyle Rodda, a financial market analyst at Capital.com.

Gold is holding firm on a month-on-month basis despite traders trimming bets to three quarter-point rate cuts in the US for 2024, from bets of five cuts a month ago. The hope of the first cut arriving in May has receded in February, and a cut is now expected in June.

The dollar index climbed 0.6% and benchmark 10-year treasury yields gained more than 30 basis points (bps) so far in February.

Fed officials this week said there is still some distance left to cover in achieving the 2% inflation target, but the door is opening for interest rate cuts, which could likely arrive later in 2024.

Lower interest rates boost the appeal of holding non-yielding bullion.

At least seven more Fed officials are due to speak on Thursday and Friday.

Data on Wednesday showed the US economy grew at a solid clip in the fourth quarter amid strong consumer spending, but appeared to have lost some speed early this year.

Markets now await US PCE inflation data at 1.30pm GMT.

Spot silver edged 0.1% higher to $22.48/oz, platinum climbed 0.4% to $882.24, and palladium jumped 1% to $937.56.

Reuters