Gold directionless ahead of US inflation data

Gold prices consolidated in a tight range and hovered close to a near seven-month high on Thursday, as investors awaited key inflation print to gauge whether interest rate cuts in the U.S. would come sooner than previously expected.

FUNDAMENTALS

* Spot gold was flat at $2,043.69 per ounce by 0225 GMT, after hitting its highest since May 5 on Wednesday, and was poised for its second straight monthly gain.

* U.S. gold futures for December delivery fell 0.2% to $2,044.20 per ounce.

* The dollar index drifted near three-month lows, and was set to log its worst monthly performance in a year in November.

* A weaker dollar makes gold less expensive for other currency holders.

* Yields on 10-year Treasury notes hit a two-and-a-half-month low of 4.2210%.
* Federal Reserve officials this week flagged the possibility of a rate cut in the months ahead and cooling inflationary pressures.
* Traders have now advanced their bets for a rate cut by the U.S. central bank from an 80% chance in May to a one-in-two chance in March, CME’s FedWatch Tool shows.

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

* Investor focus will be on U.S. personal consumption expenditure inflation report due at 1330 GMT and further on comments from Fed Chair Jerome Powell, who is due to speak on Friday.

* International pressure grew on Israel and Hamas to extend a truce after another exchange of hostages for Palestinian prisoners and humanitarian aid was delivered to the besieged Gaza Strip.

* China’s manufacturing activity contracted for a second straight month in November and at a quicker pace, an official factory survey showed, suggesting more policy support measures are needed to help shore up economic growth.

* Spot silver fell 0.1% to $24.99 per ounce. Platinum was also down 0.1% to $931.28. Palladium fell 0.2% to $1,025.58 per ounce. DATA/EVENTS (GMT) 0130 China NBS Manufacturing PMI Nov 0745 France Q3 GDP QQ, CPI Prelim YY-Nov — 0830 Hong Kong Retail Sale Vol YY Oct 0855 Germany Unemployment Rate SA Nov 1000 EU HICP Flash Nov 1000 EU Unemployment Rate Nov 1200 India GDP Quarterly YY Q2 1200 Canada Business Barometer Nov 1330 US PCE Price Index Oct 1330 Canada GDP Sep 1405 US NY Fed Prez Williams speaks — 2330 Japan Unemployment rate Oct.