Jan 26 (Reuters) – Gold prices edged higher on Friday,
but were on track for their second consecutive weekly fall as
data indicating strong growth in the U.S. economy kept the
dollar firm, while focus shifted to a key inflation print due
later in the day.
FUNDAMENTALS
* Spot gold was up 0.1% at $2,021.79 per ounce by
0155 GMT. The contract has lost 0.4% so far this week.
* U.S. gold futures rose 0.2% to $2,021.70.
* The U.S. economy grew faster than expected in the fourth
quarter as inflationary pressures subsided amid strong consumer
spending.
* Bullion slightly trimmed its losses for the week on
Thursday after the U.S. GDP data highlighted that pace of
inflation slowed and bond yields dropped.
* A private survey earlier this week showed the U.S. economy
kicked off 2024 on a strong note, with business activity picking
up in January and inflationary pressures appearing to abate.
* The dollar index rose 0.2% for the week, hovering
near a six-week high, making bullion less attractive to other
currency holders.
* The European Central Bank kept interest rates unchanged at
a record-high 4% and ECB President Christine Lagarde said it was
“premature to discuss rate cuts” but noted that risks to
economic growth are “tilted to the downside.”
* Markets widely expect the U.S. Fed to stand pat on rates
at its policy meeting on Jan. 30-31, but attention will largely
be on comments from Chair Jerome Powell.
* Traders are betting on a 93% chance for a rate cut by May,
according to LSEG’s interest rate probability app IRPR.
* Focus now shifts to the Fed’s favourite inflation gauge –
the personal consumption expenditure (PCE) data – due at 1330
GMT.
* Lower interest rates decrease the opportunity cost of
holding bullion.
* Spot silver fell 0.2% to $22.87 per ounce, platinum
dipped 0.1% $890.76, and palladium edged 0.1%
lower to $939.64.
DATA/EVENTS (GMT)
0500 Japan Leading Indicator Revised Nov
0700 Germany Bfk Consumer Sentiment Feb
0745 France Consumer Confidence Jan
1330 US PCE data Dec
1400 US Dallas Fed PCE Dec
1500 US Pending Home Index Dec
(Reporting by Harshit Verma in Bengaluru; Editing by Sherry
Jacob-Phillips)