Gold is directionless as attention shifts to the US inflation data

18 Dec 2023 , 10:06 AM

Early on Monday in Asian trading, gold prices were losing ground as traders anticipated U.S. inflation data later in the week, which would provide additional insight into the Federal Reserve’s future interest rate path following last week’s dovish turn.

Spot gold was barely moving, trading at $2,019.49 an ounce. US gold futures decreased by 0.1% to $2,033.20.

The Fed kept interest rates unchanged last week and gave a hint that the record monetary policy tightening that has been in place over the past two years is coming to an end, with lower borrowing costs anticipated in 2024.

According to the CME FedWatch tool, markets are currently pricing in a 70% possibility of a rate drop by the Fed in March. Non-interest bearing bullion is typically supported by lower interest rates.

There is a lot of talk that the Bank of Japan is debating whether and when to abandon negative interest rates as it hosts its policy meeting on Tuesday.

This week, the markets are anticipating a plethora of U.S. economic data, including Friday’s core personal consumption expenditure (PCE) index report for November.

Core PCE was expected by analysts to increase by 0.2% last month, but the annual inflation rate dropped to 3.4%, the lowest level since mid-2021.

According to data released on Friday, U.S. company activity increased in December due to an increase in orders and labour demand, which may calm concerns about a significnt slowdown in the country’s economic development in the fourth quarter.

Spot silver decreased 0.2% to $23.76 an ounce, while palladium fell 1.6% to $1,155.39 and platinum increased 0.1% to $940.91.

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