Gold hits over 1-month peak on Fed rate-cut hopes

ReutersLast Updated: Jan 16, 2025, 07:07:00 AM IST

Synopsis

Expectations for more Fed rate cuts this year increased following the CPI data, and odds for an at least 25 basis point cut at the June Fed meeting.

- Gold prices hit more than one-month highs on Thursday in early Asian hours after data showed U.S. core inflation rose less than expected in December, raising hopes that the Federal Reserve could ease interest rates further.

FUNDAMENTALS

* Spot gold was flat at $2,695.84 per ounce, as of 0051 GMT, after hitting its highest since Dec. 12 earlier in the session. U.S. gold futures gained 0.2% to $2,723.80.

* Supporting bullion, the U.S. Treasury yields fell and the dollar pared some losses against major peers on Wednesday but stayed weaker.

* Expectations for more Fed rate cuts this year increased following the CPI data, and odds for an at least 25 basis point cut at the June Fed meeting.

* The Fed is expected to hold its benchmark rate steady in the current 4.25%-4.50% range at its next policy meeting on Jan. 28-29.

* Concerns linger about potential tariffs from President-elect Donald Trump's incoming administration that could further stoke inflation.

* The central bank officials said data released on Wednesday showed U.S. inflation was continuing to ease even as they noted heightened uncertainty in the coming months, as they await a first glimpse of the incoming Trump administration's policies.

* On the geopolitical front, Hamas and Israel reached a deal for a ceasefire in Gaza that mediators said would take effect on Sunday and include a release of hostages held there during 15 months of bloodshed that devastated the Palestinian enclave and inflamed the Middle East.

* Spot silver shed 0.3% to $30.57 per ounce and palladium steadied at $961.45. Platinum added 0.2% to $940.45.

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