Gold prices gain on softer dollar, Treasury yields

Gold prices edged higher on Thursday, helped by a softer dollar and lower Treasury yields as traders looked forward to November U.S. inflation data due out on Friday for more clues on the Federal Reserve’s monetary policy outlook.

FUNDAMENTALS

* Spot gold was up 0.2% at $2,033.92 per ounce, as of 0106 GMT. U.S. gold futures inched lower to $2,045.70.

* Benchmark U.S. 10-year bond yields fell to an almost five-month month low on Wednesday after British inflation plunged in November to its lowest rate in over two years.

* The dollar was down 0.1% against its rivals, making gold less expensive for other currency holders.

* A dovish tilt from the Fed in their last policy meeting has prompted traders to pencil in several rate cuts in 2024, starting as early as March.

* However, Fed officials have since been pushing back against the idea of rapid rate cuts next year.
* Philadelphia Fed President Patrick Harker said he still opposes any further central bank rate hikes, while signalling openness to lowering short-term borrowing costs, albeit not imminently.
* Lower interest rates decrease the opportunity cost of holding non-yielding bullion.

* All eyes are now on the November core personal consumption expenditure (PCE) index report, the Fed’s preferred measure of underlying inflation.

* Data on Wednesday showed U.S. existing home sales rose unexpectedly in November. U.S. consumer confidence increased more than expected in December amid optimism about the labour market.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.07% to 878.25 tonnes on Wednesday.

* Spot silver rose 0.4% to $24.20 per ounce, while platinum gained 0.2% to $960.52 and palladium climbed 0.7% to $1,204.15.