Gold prices held ground on Thursday as traders awaited the Federal Reserve’s preferred inflation gauge due later in the day that could provide a fresh perspective into when the US central bank could start cutting interest rates.

Gold prices gain on softer dollar

Fundamentals

• Spot gold was steady at $2,035.78 per ounce, as of 0210 GMT. US gold futures edged 0.1% higher to $2,044.20.

• Data on Wednesday showed the US economy grew at a solid clip in the fourth quarter amid strong consumer spending, but appeared to have lost some speed early this year.

• New York Fed President John Williams said even as there’s still some distance to cover in achieving the US central bank’s 2% inflation target, the door is opening to interest rate cuts this year depending on how the data come in.

• Boston Fed President Susan Collins said the Fed will likely need to start cutting rates later this year.

• At least seven more Fed officials are due to speak on Thursday and Friday.

• Traders are betting on about 81 basis points (bps) of rate cuts for 2024, with a 63% chance of the first quarter-point (25 bps) cut coming in June, according to LSEG’s interest rate probability app IRPR.

• Lower interest rates boost the appeal of holding non-yielding bullion.

• Markets now await a key inflation reading - the core personal consumption expenditures (PCE) price index - at 1330 GMT.

• Spot silver rose 0.2% to $22.51 per ounce, and platinum climbed 0.3% to $880.89, while palladium fell 0.2% to $926.97.