Gold Prices Rebound as Investors Seek Bargains Ahead of Key Inflation Data
After a sharp decline in the previous session, gold prices edged up on Wednesday as investors took advantage of lower prices. The focus has now shifted to the highly anticipated U.S. inflation data, which is expected to provide valuable insights into the Federal Reserve’s future monetary policy decisions.
Bargain Hunting Drives Gold Prices Up
Spot gold prices rose 0.4% to $2,606.42 per ounce by 0733 GMT, recovering from its lowest level since September 20. Meanwhile, U.S. gold futures also gained 0.2% to $2,612.30. According to Kelvin Wong, senior market analyst for Asia Pacific at OANDA, “bargain hunting is underway as prices fell below the $2,600 mark.”
Inflation Expectations and the Dollar’s Impact
The recent decline in gold prices was largely driven by a stronger dollar, fueled by expectations of inflationary policies under the new U.S. administration. However, with traders now pricing in a 62% chance of a 25 basis points rate cut at the Fed’s December meeting, the dollar’s strength may be waning.
Key Economic Data Releases Ahead
Investors are eagerly awaiting the release of the U.S. Consumer Price Index (CPI) data, scheduled for 1330 GMT. If inflation remains contained, gold prices could potentially test $2,650, Wong noted. Additionally, the U.S. Producer Price Index (PPI) and weekly jobless claims are due on Thursday, followed by retail sales data on Friday.
Fed Officials’ Remarks and Fiscal Policy Implications
Remarks from Fed Chair Jerome Powell and other U.S. central bank officials will also be closely monitored by investors. The Fed’s policy rate continues to impact the labor market and inflation, which remains above the 2% target. Furthermore, plans to extend tax cuts and increase spending could deteriorate the U.S. fiscal situation, potentially leading to macroeconomic policy adjustments that would support gold, according to ANZ.
Other Precious Metals See Gains
In addition to gold, other precious metals also saw gains on Wednesday. Spot silver rose 0.5% to $30.86, platinum added 0.4% to $951.10, and palladium gained 0.6% to $949.70.
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