By Rahul Paswan
(Reuters) – Gold prices were steady on Thursday after hitting over one-month highs, as softer U.S. core inflation data lifted expectations that more rate cuts were still on the table, although news of a ceasefire accord between Israel and Hamas capped further gains.
Spot gold held its ground at $2,693.93 per ounce, as of 0603 GMT, after hitting its highest since Dec. 12 earlier in the session. U.S. gold futures gained 0.2% to $2,723.70.
“Easing underlying inflation in the U.S. renewed hopes of a less-restrictive Fed policy this year. The core inflation unexpectedly slowed, while headline consumer prices showed no significant upside surprises,” said Jigar Trivedi, senior analyst at Reliance Securities.
“That supported bullion demand as progress in disinflation could prompt the FOMC to ease monetary policy, reducing the opportunity cost of holding non-yielding assets.”
The prospect of more Fed rate cuts this year heightened following the data, and interest rate futures traders on Wednesday were pricing in near-even odds that the U.S. central bank would reduce rates twice by the end of this year, with the first reduction to come in June.
Central bank officials said the data showed U.S. inflation was continuing to ease even as they noted heightened uncertainty in the coming months, as they await a first glimpse of the incoming Trump administration’s policies.
Potential tariffs from U.S. President-elect Donald Trump’s incoming administration could further exacerbate inflationary pressures.
The dollar slipped to stand just off recent peaks as cooling U.S. inflation data knocked down bond yields, further supporting bullion prices. [US/][USD/]
Meanwhile, the Israel and Hamas reached a ceasefire and hostage agreement, reducing some safety appeal of the metal, Trivedi said.
Gold hit multiple records last year as Middle East tensions fuelled its safe-haven appeal along with anticipation of more easing by major central banks including the U.S. Fed.
Spot silver was flat at $30.66 per ounce and palladium dropped 1% to $951 and platinum shed 0.2% at $936.45.
(Reporting by Rahul Paswan in Bengaluru; additional reporting by Swati Verma; Editing by Rashmi Aich and Sherry Jacob-Phillips)
