Economic news

Gold Extends Gains after US Data Eases Rate Cut Worries

  • Fed policymakers say easing will resume in 2025 but after pause
  • Trump's initial decrees could be bullish for gold, says analyst
  • Gold speculators cut net long position

Dec 23 (Reuters) - Gold extended gains on Monday after a softer-than-expected U.S. inflation reading revived hopes for further monetary policy easing by the Federal Reserve in the coming year.

Spot gold gained 0.4% to $2,631.89 per ounce by 0734 GMT, rising for a third straight session after bullion prices hit their lowest since Nov. 18 on Wednesday on a hawkish Fed.

U.S. gold futures eased 0.1% to $2,645.80.

"We are entering the holiday mode and gold's mainly been helped by short-covering, which started on Friday itself and there is some technical support as well," said Ajay Kedia, director at Kedia Commodities, Mumbai.

Gold prices gained 1% on Friday on a softer U.S. dollar and Treasury yields after data indicated a slowdown in inflation.

The report showed monthly inflation slowed in November after little improvement in recent months. The personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge, rose 0.1% last month after an unrevised 0.2% gain in October.

In the 12 months to November, the PCE index advanced 2.4%, compared with a 2.3% increase in the year to October. However, it remained below the expected 2.50% rise.

San Francisco Fed President Mary Daly and two other Fed policymakers said they felt the central bank would likely resume easing next year but signalled they would take their time given that the "recalibration phase" was over.

Higher interest rates dull non-yielding bullion's appeal.

"The next big impact is the incoming presidency of (Donald) Trump and the initial presidential decrees that he might declare. This has the potential to add to market volatility and be bullish for gold prices," said Michael Langford, chief investment officer at Scorpion Minerals.

Meanwhile, COMEX gold speculators cut net long positions by 16,251 contracts to 203,937 in the week to Dec. 17, data showed.

Spot silver rose 1.1% to $29.84 per ounce, platinum climbed 1.2% to $937.35, and palladium ticked up 0.2% to $922.68.

Reporting by Rahul Paswan in Bengaluru; Editing by Sumana Nandy, Mrigank Dhaniwala and Subhranshu Sahu

Source: Reuters


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