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Picture: 123RF
Picture: 123RF

Bengaluru — Gold cut early losses on Monday as investors looked forward to US president-elect Donald Trump’s inauguration speech for clarity on the incoming administration’s policies, which could offer further clues on the US Federal Reserve’s interest rate path.

Spot gold was down 0.1% at $2,697.60/oz, as of 3am GMT, after falling 0.5% earlier in the day. US gold futures dropped 0.3% to $2,740.10/oz.

“Gold has been on the receiving end of selling pressure today, but the precious metal’s status as a traditional safe-haven asset should limit the immediate downside,” said Tim Waterer, chief market analyst at KCM Trade.

“If we happened to hear a more conciliatory or softer tone from President Trump regarding trade and tariff polices, this could alleviate inflationary concerns, which may see the US dollar and treasury yields recede, and gold is potentially one asset which could benefit from this scenario.”

Market players were keenly awaiting Trump’s inauguration later in the day, and his broad trade tariff policies are expected to further ignite inflation and trigger trade wars, potentially increasing bullion's safe-haven appeal.

Gold is used as an inflation hedge, but higher interest rates dampen its appeal. It also serves as a safe-haven asset.

The future path of US interest rates will depend on how aggressively the incoming administration follows through on Trump’s policy pledges.

The Federal Reserve is likely to hold interest rates steady on January 29 and resume cutting in March, according to a slim majority of economists polled by Reuters.

Elsewhere, Hamas released three Israeli hostages and Israel released 90 Palestinian convicts on Sunday, the first day of a ceasefire suspending a 15-month-old war.

Spot silver fell 0.6% to $30.16/oz, palladium steadied at $947.99/oz and platinum shed 0.2% to $940.84/oz.

Reuters

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