Spot Gold continued holding in proximity to a 2-month high of $4,374.65/oz. and was on course for its second consecutive weekly advance, as softer-than-expected US inflation data reinforced expectations of further policy easing by the Federal Reserve.
Annual headline consumer inflation in the US has eased to 2.7% in November, while annual core CPI inflation has eased to 2.6% – the lowest level since March 2021.
“The softer inflation print was a bit of a double-edged sword (for gold and silver), in that it helps justify a dovish trajectory from the Fed, but it also means that they lose some of their appeal as an inflation hedge,” KCM Trade Chief Market Analyst Tim Waterer was quoted as saying by Reuters.
“The dollar standing its ground, is also creating some resistance.”
The Federal Reserve delivered a largely anticipated rate cut last week, while noting it will wait for clearer signs on a cooling job market and inflation, which “remains somewhat elevated”.
FOMC policy makers signaled just one 25 bps rate cut for next year, while investors continue to expect two rate cuts of 25 basis points each.
Lower interest rates tend to reduce the opportunity cost of holding Gold, which pays no interest.
Spot Gold was last down 0.12% on the day to trade at $4,327.21 per troy ounce.
The precious metal has risen 0.61% so far this week.
Strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve, robust ETF inflows and geopolitical uncertainty have fueled Gold’s rally to a series of record highs this year. Its current all-time high stands at $4,381.21/oz.
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