Gold Holds Near Two-Week High Amid Rate Cut Hopes

Mumbai, 12 Dec (Commoditiescontrol): Gold prices edged higher for the fifth consecutive session on Thursday, nearing a two-week peak as expectations grew for a Federal Reserve interest rate cut next week. The optimism follows U.S. inflation data aligning with market forecasts, reinforcing the possibility of monetary easing.

Spot gold increased by 0.1% to $2,719.79 per ounce, while U.S. gold futures remained steady at $2,755.40. Despite a significant seven-month high in U.S. consumer prices during November, the Federal Reserve is widely expected to proceed with its third interest rate reduction at its December 17-18 meeting. According to CME's FedWatch Tool, traders estimate a 98.6% probability of a 25-basis-point rate cut.

The market’s attention now turns to the upcoming U.S. Producer Price Index (PPI) data, set for release at 1330 GMT, which could provide further clues about the Fed’s monetary strategy for 2025.

Meanwhile, the European Central Bank (ECB) is anticipated to reduce interest rates on Thursday, potentially signaling more easing in the upcoming year as the euro zone economy struggles and inflation approaches its target.

Gold, often viewed as a safe-haven investment during times of economic uncertainty and geopolitical tension, benefits in a low-interest-rate environment. In a related development, the United Nations General Assembly called for an immediate and unconditional ceasefire in the ongoing conflict between Israel and Hamas in Gaza, urging the release of hostages.

Citi analysts forecast a gradual uptrend in precious metals markets over the next 3-12 months, with gold potentially reaching $3,000 per ounce and silver hitting $36 per ounce. Additionally, the SPDR Gold Trust, the largest gold-backed exchange-traded fund, reported a 0.30% increase in holdings, reaching 873.38 tonnes on Wednesday.

Other precious metals also recorded gains, with spot silver rising 0.1% to $31.94 per ounce, platinum gaining 0.4% to $943.10, and palladium climbing 0.5% to $986.25.

(By Commoditiescontrol Bureau: 09820130172)