Gold gains momentum on anticipation of US rate cuts
Gold shines as US economy cools. Investors eye rate cuts, with dollar weak. Safe-haven buying amid global economic uncertainties
Gold prices perked up on Friday, gaining momentum from a slight dip in third-quarter U.S. GDP and soft labor market data, pushing the dollar to a four-month low.
Now, all eyes are on key inflation data anticipated later in the day. Investors eagerly await confirmation that the Federal Reserve plans to cut interest rates in 2024.
At 11:00 GMT, spot gold rose by 0.4% to $2,055.6 per ounce, while gold futures saw a 0.5% increase to 42,061.40 per ounce.
The drop in US real yields, as expectations grow for the Fed's first rate cut in March, is giving gold prices a positive nudge. Additionally, concerns in the Red Sea are prompting some safe-haven buying.
With the dollar index near a five-month low, gold is becoming more appealing to holders of other currencies. Meanwhile, the benchmark US 10-year bond yields are hovering close to their lowest point since July.
Traders are now indicating an 83% probability of a US rate cut by March. Lower interest rates reduce the cost of holding non-yielding bullion.
Despite Federal Reserve's officials resisting the idea of swift rate cuts in the coming year, these statements have not significantly shifted investor sentiment.
The spotlight is on the upcoming November core personal consumption expenditure (PCE) price index report, scheduled for 1330 GMT. This report, the Fed's preferred measure of underlying inflation, is expected to shed more light on the US rate outlook.
