Gold prices edge lower as strong US data fuels rate uncertainty

Gold prices fell slightly in Asian trade on Thursday after signs of sticky U.S. inflation and a strong economy sparked doubts over just how much the Federal Reserve will cut interest rates. 

The yellow metal was already nursing some losses this week as news of an Israel-Hezbollah ceasefire sapped demand for safe havens. 

But overall losses in gold were limited as the dollar retreated further from recent peaks, with traders still maintaining bets on a December interest rate cut. 

Spot gold fell 0.2% to $2,630.52 an ounce, while gold futures expiring in February fell 0.4% to $2,653.91 by 23:00 ET (04:00 GMT).  Strong PCE, GDP data spur rate cut doubts 

PCE price index data- the Fed’s preferred inflation gauge- rose as expected in October, moving further above the central bank’s 2% annual target. The reading was accompanied by gross domestic product data showing steady growth in the third quarter, as well as slightly stronger-than-expected weekly jobless claims data.

While the readings did little to deter expectations for a December rate cut, traders were seen growing more uncertain over the outlook for rates in 2025.

Uncertainty over a Donald Trump presidency added to the mix, given that he is expected to dole out more expansionary policies and trade tariffs that will push up inflation.

This trend is expected to limit the Fed’s easing cycle. UBS analysts said in a recent note the central bank will slow down its rate cuts to a once-a-quarter affair in 2025, and also forecast a higher terminal rate.

Higher-for-longer rates bode poorly for non-yielding assets such as gold.

Other precious metals also fell on Thursday and were nursing steep losses in recent weeks. Platinum futures steadied at $933.40 an ounce, while silver futures fell 1% to $30.255 an ounce.  Copper prices weak, more China cues awaited 

Among industrial metals, copper prices moved little after logging steep losses in recent sessions, with focus turning to more economic cues from top copper importer China.

Benchmark copper futures on the London Metal Exchange fell 0.1% to $9,015.0 a ton, while February copper futures steadied at $4.1410 a pound.

The red metal was pressured by growing fears of a Sino-U.S. trade war, after U.S. President-elect Donald Trump threatened to impose more tariffs against China.

Traders were also waiting to see what stimulus measures Beijing will enact to offset economic pressure from any increased U.S. tariffs.

Chinese purchasing managers index data for November is due on Saturday and will offer more cues on the economy.

Source: Investing.com