Gold prices scales $2,700/oz level to over one-month high

Gold prices rose to above one-month highs Thursday, tracking a drop in the dollar and Treasury yields as mildly softer consumer inflation data spurred bets on lower interest rates this year. 

AT 4:19 ET (21:19 GMT), Spot gold rose 0.6% to $2,713.40 an ounce, while gold futures expiring in February rose 1% to $2,745.72 an ounce. 

The yellow metal broke above $2,700 an ounce for the first time since early December, amid some bets that softer inflation and a cooling labor market will allow the Federal Reserve to cut interest rates further this year. 

But more gains in gold were limited by diminished safe haven demand, after Israel and Hamas signed a U.S.-brokered ceasefire.   Gold benefits from CPI relief, dollar down 

Gains in gold came largely after consumer price index inflation data for December read slightly lower than expected. Headline CPI was in line with estimates, while core CPI just missed expectations. 

But the print- which came just a day after softer-than-expected producer price index data- spurred increased bets that easing U.S. inflation will give the Fed more confidence to cut rates this year. The central bank is projected to cut rates twice in 2025, half of its total reductions in 2024.

Lower rates benefit gold by reducing the opportunity cost of investing in non-yielding assets. 

The dollar slid from a two-year high on the CPI data, but still retained a bulk of its run-up in the past month.  Gold gains limited as safe haven demand eases

But gains in gold were limited by easing safe haven demand, especially after the Israel-Hamas ceasefire. The Middle East conflict had been a key driver of gold demand in 2024. 

The yellow metal was also pressured by a rally in broader risk-driven assets, as the prospect of US rate cuts boosted risk appetite.

Traders were also on edge after US retail sales  increased at a slower than anticipated month-on-month rate in December, in the latest data point that could paint a picture of the state of American economy heading into the new year.

Retail sales grew by 0.4% last month, down from an upwardly revised pace of 0.8% in November. Economists had called for a reading of 0.6%.

Other precious metals, however, were mixed, having seen gains on this week’s inflation readings. Platinum futures fell 0.5% to $940.40 an ounce, while silver futures rose 0.2% to $31.59 an ounce.

Among industrial metals, copper prices edged higher, adding to a series of strong gains in recent sessions. Benchmark copper futures on the London Metal Exchange rose 0.9% to $9,246.00 a ton, while March copper futures were up 1% to $4.4357 a pound.

Focus is now squarely on Chinese gross domestic product data for the fourth quarter, due on Friday, for more cues on the world’s biggest copper importer.

(Ambar Warrick contributed to this article.)

Source: Investing.com