NEW YORK: Gold prices edged down on Thursday, but held near a five-week peak, as risk appetite increased ahead of a European Central Bank monetary policy decision and investors awaited US PPI data for signals on the Federal Reserve’s interest rate outlook.
Spot gold fell 0.3% to $2,709.89 per ounce as of 1210 GMT. US gold futures fell 0.5% to $2,742.50. Earlier in the session, bullion hit its highest since Nov. 6, supported by bets that the Fed will cut interest rates again next week after Wednesday’s consumer prices data. The report showed a 0.3% rise, the largest gain since April after advancing 0.2% for four straight months.
US inflation data that was in line with forecasts sustained expectations for a rate cut, pushing gold prices higher on Wednesday, but the gains flattened as increased risk appetite accompanied the prospect of lower rates, said Ricardo Evangelista, senior analyst at ActivTrades.
Gold tends to thrive in a low-interest-rate environment. Equity markets rose after the tech-focused Nasdaq closed above 20,000 for the first time on Wednesday. “Support (for gold) is expected to hold firm around the $2,700 level, while resistance is likely near today’s high of $2,726,” Evangelista added.
According to CME’s FedWatch tool, the odds of a rate cut in December have climbed to around 99%. The US producer price index is set to be released later on Thursday, which may further cement those bets and shed light on the Fed’s 2025 policy stance.
“This is an unusual time of year where one sees cross currents from profit-taking after a 30% gain year to date,” independent analyst Ross Norman said. Meanwhile, the European Central Bank is all but certain to cut rates again on Thursday and signal further easing in 2025. Elsewhere, Israelis and Palestinians are signaling renewed efforts toward a limited ceasefire in Gaza, to try to halt fighting and secure the release of some hostages.
Bullion is considered as a safe investment during economic and geopolitical turmoil. Spot silver shed 0.2% to $31.83 per ounce, platinum lost 0.7% to $933.10, and palladium fell 0.4% to $977.72.