Gold firms on dollar dip; spotlight on Fed policy decision

Follow us on Google News:

By Ashitha Shivaprasad


(Reuters) - Gold firmed just below the key $1,800 level on Friday as the dollar eased, with caution ahead of U.S. inflation data and the Federal Reserve's policy decision due next week limiting overall moves.

Spot gold was up 0.3% at $1,794.49 per ounce, as of 0648 GMT, but fell 0.2% this week. U.S. gold futures rose 0.3% to $1,807.10.

The dollar index was down 0.2%. A weaker dollar makes gold more attractive to buyers holding other currencies. [USD/]

There's a real chance of an upward move in gold heading into next week's Fed meet and CPI data, said Clifford Bennett, chief economist at ACY Securities.

Investors now expect a 93% chance of a 50-basis point rate hike at the Fed's policy meeting on Dec. 13-14. The U.S. Consumer Price Index (CPI) report for November is due on Dec. 13.

If the Fed slows the pace as per expectations, along with a relatively moderate CPI print, "then dollar might weaken and all of a sudden you could see a perfect storm rushing over gold's horizon," Bennett added.

Lower interest rates tend to be beneficial for bullion as they decrease the opportunity cost of holding the non-yielding asset.

Traders will care to see what the Fed has to say about the trend of inflation and where rates could peak, Edward Moya, senior analyst with OANDA, said in a note.

"Gold looks like it will find a home around the $1,800 level, until we have further indications."

The number of Americans filing new claims for jobless benefits increased moderately last week, pointing to a still-tight and strong labor market despite growing fears of a recession.

Spot silver edged 0.3% higher to $23.15, platinum rose 0.7% to $1,010.30. Palladium lost 0.5% to $1,918.01, but was headed for second straight weekly gain.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich)

Disclaimer

The above content is directly sourced from Reuters under a contractual arrangement. The content is being provided as a convenience and for informational purposes only; and does not constitute an endorsement or approval by Kalkine Media of any of the products, services, or opinions of the organization or individual. The user is apprised that Kalkine Media bears no responsibility for the accuracy, legality, or content of Reuters, any external sites, or for that of subsequent links. The user is requested to contact Reuters directly for answers to questions regarding the content. Please note that Kalkine Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Featured Articles