Gold rises as the dollar declines, with US inflation data in spotlight

12 Dec 2023 , 09:30 AM

Tuesday saw a little increase in gold prices following a three-week low in the previous session as the dollar depreciated and investors watched for interest rate cues from important U.S. inflation data and central bank policy meetings.

Spot gold was up 0.2% at $1,985.49 per ounce, having touched Since the dollar index was down 0.1% compared to its competitors, gold became more affordable for holders of other currencies.

The Federal Reserve’s target of 2% is much above core inflation, which is expected to remain stable at an annual pace of 4% according to Reuters polled economists. U.S. headline inflation is expected to remain unchanged in November. On Tuesday at 13:00 GMT, the U.S. Consumer Price Index (CPI) report is expected.

According to a New York Fed survey released on Monday, the direction that American consumers anticipate inflation to go in the upcoming year weakened in November to the lowest point in over two years.

The Federal Open Market Committee will announce its interest rate decision and reveal its summary economic estimates on Wednesday, capping off a two-day meeting focused on monetary policy.

The CME FedWatch Tool indicates that traders are pricing in a roughly 77% possibility of a rate drop in May and generally anticipate the Fed to keep rates unchanged at 5.25%–5.50% this week.

Non-interest-bearing bullion is typically supported by lower interest rates.

On Thursday, the Bank of England and the European Central Bank will also hold policy meetings.

The largest exchange-traded fund backed by gold in the world, SPDR Gold Trust, reported that its holdings decreased by 0.23% to 878.54 tons on Monday from 880.55 tons on Friday.

Palladium increased by 0.6% to $962.89 per ounce and platinum remained stable at $910.51, while spot silver increased by 0.1% to $22.81 per ounce.

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