Gold Extends Losses as Traders Book Profit After Mixed US Data
Gold extended declines after mixed US data prompted investors to book profits following the metal’s four-day advance.
US wholesale inflation unexpectedly accelerated in November on a surge in egg prices, while other categories suggested a muted increase in the Federal Reserve’s preferred price gauge. Meanwhile, applications for US unemployment benefits rose to a two-month high last week.
Bullion slipped by as much as 1.4%, the largest intraday drop in more than two weeks. The metal had made strong gains in the previous session as an in-line consumer price report bolstered bets for a 25-basis-point rate cut when Fed policymakers meet next week.
“We have reached the time of year where convictions are low and positions are being held on a short leash, meaning any price reversal will be met with position squaring,” said Ole Hansen, head of commodities strategy at Saxo Bank.
While swap traders now place near certainty of a rate cut by the Fed next month, the trajectory of monetary policy at the US central bank in 2025 is far from assuring as the world braces for Donald Trump’s return to the White House.
“Markets are pricing in a potential Fed pause in January 2025 and the risk of a slower pace of Fed cuts going forward,” said Christopher Wong, FX strategist at Oversea-Chinese Banking Corp. Lower borrowing costs typically aid non-yielding bullion.
Earlier Thursday, the European Central Bank lowered interest rates for a third consecutive meeting, signaling more reductions next year as inflation nears 2% and the economy struggles.
Gold is on track for its biggest annual gain since 2007, with support from Fed easing, haven demand, and sustained buying by the world’s central banks.
Traders were also monitoring a dislocation between the New York and London markets for gold and silver, with premiums for futures contracts jumping on Wednesday. The possibility of precious metals being subject to US import tariffs under the Trump administration has triggered the divergence, analysts said.
Gold for immediate delivery was down 1.4% to $2,680.99 an ounce at 10:35 a.m. in New York. The commodity’s latest record was set at the end of October, with prices peaking just above $2,790. The Bloomberg Dollar Spot Index was 0.2% higher. Silver, platinum and palladium all fell.
Source : Bloomberg
