Gold hits one-month high as prospects for Fed cuts rise on softer US inflation data
Gold prices firmed near one-month highs hit earlier on Thursday after a softer-than-expected core U.S. inflation print increased chances of two Federal Reserve rate cuts this year, with the first likely in June.
Spot gold gained 0.3% to $2,704.56 per ounce as of 0934 GMT after hitting its highest level since Dec. 12 earlier in the session. U.S. gold futures gained 0.7% to $2,736.50.
Further gains in safe-haven bullion were, however, limited as Hamas and Israel reached a deal for a ceasefire in Gaza after 15 months of conflict and heightened Middle East tensions.
Interest rate futures traders are pricing in near-even odds that the Fed would reduce rates twice by the end of this year, with the first reduction to come in June. Before the inflation data on Wednesday, futures were only pricing a single quarter-point interest-rate cut in 2025.
Core U.S. inflation increased 0.2% in December after rising 0.3% for four straight months.
Central bank officials noted U.S. inflation continues to ease after Wednesday's data, but foresee uncertainty due to anticipated Trump administration policies.
Investors are worried that the potential for tariffs after Donald Trump re-enters the White House next week could stoke inflation and limit the Fed's ability to lower rates to a greater extent.
Non-yielding bullion, a hedge against inflation, loses its appeal with higher interest rates.
Elsewhere, spot silver rose 0.7% to $30.87 per ounce and platinum firmed 0.6% to $944.23, while palladium fell 0.8% to $953.49.
Source: Reuters
