Gold Prices Surge to One-Month High Amid Renewed Hopes of Rate Cuts

Gold prices held steady on Thursday after hitting their highest levels in over a month, buoyed by softer U.S. inflation data that renewed hopes for interest rate cuts. However, a ceasefire agreement between Israel and Hamas tempered further gains.

Market Highlights:

• Spot Gold: Stabilized at $2,696.30 per ounce as of 0301 GMT, after reaching its highest level since Dec. 12 earlier in the session.

• U.S. Gold Futures: Rose 0.3% to $2,725.20 per ounce.

"Easing underlying inflation in the U.S. renewed hopes of a less restrictive Federal Reserve policy this year," noted Jigar Trivedi, senior analyst at Reliance Securities. "Core inflation unexpectedly slowed, while headline consumer prices showed no significant upside surprises."

The progress in disinflation could prompt the Federal Open Market Committee (FOMC) to adopt a more dovish stance, reducing the opportunity cost of holding non-yielding assets like gold.

Key Factors Driving the Market:

1. U.S. Inflation Data: The latest data indicated that inflationary pressures are easing, bolstering expectations of at least two rate cuts by the Federal Reserve this year, with the first anticipated in June.

2. Dollar Movement: The U.S. dollar weakened, trading below recent peaks as cooling inflation data pulled down bond yields, further supporting gold prices.

3. Geopolitical Developments: A ceasefire agreement between Israel and Hamas, including a hostage release, reduced some of gold’s safe-haven appeal, according to Trivedi.

4. Economic Uncertainty: Despite easing inflation, concerns persist over potential tariffs from the incoming U.S. administration, which could reignite inflationary pressures.

Other Precious Metals:

• Spot Silver: Fell 0.2% to $30.61 per ounce.

• Palladium: Dropped 0.3% to $958.50 per ounce.

• Platinum: Held steady at $938.25 per ounce.

The cooling inflation data and geopolitical developments are likely to keep investors closely monitoring central bank signals and global events to gauge gold’s trajectory in the coming months.

Follow Emirates 24|7 on Google News.