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February 24, 2024
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Gold gains on softer dollar as markets await more Fed cues

PRECIOUS-Gold gains on softer dollar as markets await more Fed cues

Dollar index falls 0.1%

ECB expected to hold rates steady in Thursday meeting

Recasts, adds comments, and updates prices as of 1022 GMT

By Anjana Anil

Jan 23 (Reuters)Gold prices rebounded on Tuesday, helped by a weaker U.S. dollar, while investors looked forward to more U.S. economic data this week that could set the tone for the Federal Reserve’s policy meeting next week.

Spot gold XAU= was up 0.3% at $2,026.95 per ounce by 1022 GMT. U.S. gold futures GCcv1 also rose 0.3% to $2,028.60.

“The softer U.S. dollar is allowing spot gold to edge higher, despite diluted bets for a Fed rate cut in March,” said Han Tan, chief market analyst at Exinity Group.

However, “bullion may break below the $2,000 level if the prospects of a Fed rate cut in March continue diminishing,” Tan added.

The U.S. dollar .DXY was down 0.1% against a basket of currencies, making the greenback-priced gold more attractive to other currency holders.

Fed officials last week said the U.S. central bank needs more inflation data in hand before any rate cut judgment could be made and that the baseline for cuts to start was in the third quarter.

Focus this week will be on the U.S. flash PMI report on Wednesday, fourth-quarter advance GDP estimates due on Thursday and personal consumption expenditures data on Friday.

Markets widely expect the Fed to hold rates unchanged at the end of the policy meeting on Jan. 30-31 and have pared back the timing of the first interest rate cut, according to CME’s FedWatch Tool.

The European Central Bank (ECB) meets on Thursday and is expected to hold monetary policy steady. Lower interest rates decrease the opportunity cost of holding bullion.

“If central banks continue to counter the prevailing narrative that rate cuts will occur sooner rather than later, this could pressure the gold price from a yield perspective,” Tim Waterer, chief market analyst at KCM Trade, said.

Spot silver XAG= rose 0.6% to $22.24 per ounce, platinum XPT= climbed 1% to $900.93, while palladium XPD= lost 0.2% to $935.13.

Reporting by Anjana Anil and Harshit Verma in Bengaluru; Editing by Eileen Soreng

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