Gold edges higher on bargain hunting

Bengaluru — Gold prices edged up on Wednesday as investors sought bargains after steep declines in the previous session, while the spotlight shifted to US inflation data, which could shed more light on the Federal Reserve’s path for monetary policy.

Spot gold firmed 0.5% at $2,610.99/oz by 4.37am GMT, after hitting its lowest since September 20 on Tuesday. US gold futures rose 0.4% at $2,617.20.

“There is currently some bargain hunting as prices fell below the $2,600 mark,” said Kelvin Wong, Oanda senior market analyst for Asia Pacific.

“Recent sessions saw gold negatively impacted due to a stronger dollar, driven by expectations of inflationary policies by [US president-elect] Donald Trump affecting the rate cut cycle.”

Traders see a 58.7% chance of a 25 basis point (bp) cut at Fed’s December meeting, versus 77.3% a week ago, according to the CME’s FedWatch Tool.

Gold is a hedge against inflation, but higher rates dampen its appeal as it yields no interest.

If US consumer price index (CPI) data, due at 1.30pm GMT, showed the inflation trend was contained, gold could test $2,650, Wong said.

Besides that, US producer price index (PPI) and weekly jobless claims are due on Thursday, and retail sales data to end the week. Remarks from Fed chair Jerome Powell and other US central bank officials are also on investors’ radar.

“Trump’s plans to continue tax cuts beyond 2025 and to increase spending will likely deteriorate the US fiscal situation and this could pave the way for macroeconomic policy adjustments that would support gold,” ANZ said in a note.

Spot silver rose 1% at $31, platinum added 0.6% to $953.22 and palladium gained 1% at $953.84.

Reuters