Gold holds ground ahead of US inflation test

Nov 30 – Gold prices consolidated in a tight range on Thursday, hovering close to a near seven-month high, as investors awaited a key inflation print to gauge whether interest rate cuts in the US would come sooner than expected.

Spot gold  was down 0.1% at USD 2,041.76 per ounce by 0543 GMT, after hitting its highest since May 5 on Wednesday, and was poised for its second straight monthly gain. Bullion was trading in a range of about USD 5 on Thursday.

US gold futures for December delivery fell 0.2% to USD 2,042.40 per ounce.

“Prices seem to be taking a slight breather in today’s session, with some wait-and-see,” IG market strategist Yeap Jun Rong said, ahead of the U.S. personal consumption expenditure data – the Fed’s preferred inflation gauge – at 1330 GMT.

“Despite the US Q3 GDP posing an upside surprise overnight, the data failed to sway market rate-cut bets, as sentiments continue to take cues from more recent Fed (officials’) comments.”

Federal Reserve officials this week flagged the possibility of a rate cut in the upcoming months and expected growth to slow down and inflation to continue to ease, dragging yields on 10-year Treasury notes to a two-and-a-half month low of 4.2470%. 

Lower interest rates reduce the opportunity cost of holding non-interest-bearing bullion.

Traders have now advanced their bets for a rate cut by the US central bank from an 80% chance in May to a one-in-two chance in March, according to CME’s FedWatch tool.

Making gold less expensive for other currency holders, the dollar index drifted near three-month lows, and was set to log its worst monthly performance in a year in November.

Investor focus will also be on comments from Fed Chair Jerome Powell, who is due to speak on Friday.

Spot silver fell 0.2% to USD 24.95 per ounce. Platinum was down 0.2% at USD 930.24. Palladium fell 0.4% to USD 1,023.42 per ounce.