Gold hovers near 2-month low on strong dollar, Fed rate cut uncertainty

Gold prices were flat on Thursday after hitting a two-month low earlier, pressured by a stronger U.S. dollar and uncertainty regarding the pace of the Federal Reserve’s interest rate cuts.

FUNDAMENTALS

* Spot gold was flat at $2,573.73 per ounce, as of 0026 GMT, after hitting its lowest level since Sept. 19 earlier in the session. U.S. gold futures fell 0.3% at $2,578.00.

* The U.S. dollar traded near 1-year highs, making greenback priced-commodities less attractive for buyers holding other currencies.

* Data on Wednesday showed that U.S. consumer prices increased as expected in October, and progress toward low inflation has slowed in recent months, which could result in fewer interest rate cuts from the Fed next year. * Even though bullion is seen as a hedge against inflation, higher rates reduce the allure of the non-yielding asset.
* Investors are awaiting the U.S. Producer Price Index (PPI) and weekly jobless claims report, both due at 1330 GMT, along with comments from Fed Chair Jerome Powell, who is scheduled to speak later in the day.
* “In my baseline scenario, based on current information, I expect inflation to converge toward 2% over the medium term,” St Louis Fed President Alberto Musalem said, allowing the central bank to “judiciously and patiently” evaluate data in considering further rate cuts.
* Dallas Fed President Lorie Logan noted, it’s “best to proceed with caution”, noting that “if we cut too far, past neutral, inflation could reaccelerate and the FOMC could need to reverse direction.”

* Spot silver held steady at $30.32, platinum lost 0.2% to $935.60 and palladium was unchanged at $932.91.

The global silver deficit is expected to fall by 4% in 2024, with a 2% growth in total supply offsetting demand growth of 1%, the Silver Institute industry association said.

DATA/EVENTS (GMT)

1000 EU GDP Flash Estimate QQ Q3

1000 EU GDP Flash Estimate YY Q3

1330 US Initial Jobless Clm 9 Nov, w/e

1330 US PPI Machine Manuf’ing Oct