Gold prices edged lower on Thursday as robust U.S. economic data and signs of sticky inflation raised doubts about the Federal Reserve’s rate-cut trajectory.
- Market Performance:
- Spot gold dipped 0.2% to $2,630.52 an ounce, while February gold futures fell 0.4% to $2,653.91.
- Losses were limited by a weaker dollar and ongoing bets for a potential rate cut in December.
- Key Drivers:
- The PCE price index, the Fed’s preferred inflation measure, rose as expected in October, staying above the 2% target.
- GDP data showed steady Q3 growth, and jobless claims were slightly better than anticipated.
- The ceasefire between Israel and Hezbollah reduced demand for safe-haven assets like gold.
- Outlook:
- Despite December rate cut expectations, doubts linger about the pace of easing in 2025. UBS predicts the Fed may adopt a slower, quarterly rate-cut approach due to rising inflation risks, potentially leading to a higher terminal rate.
- Uncertainty surrounding President-elect Donald Trump’s expansionary policies and potential trade tariffs could further limit the Fed’s ability to cut rates aggressively.
Gold remains sensitive to macroeconomic cues, with traders closely watching inflation trends and Fed signals for future movements.
