Gold prices climbed to a one-month high in Asian trading on Thursday, supported by a decline in the dollar and Treasury yields after softer consumer inflation data fueled expectations of interest rate cuts this year.
The precious metal approached $2,700 per ounce for the first time since early December, amid optimism that easing inflation and a cooling labor market could allow the Federal Reserve to further reduce rates in 2025. However, additional gains were capped by reduced safe-haven demand following a U.S.-brokered ceasefire between Israel and Hamas. Uncertainty surrounding upcoming U.S. economic data and President-elect Donald Trump’s nomination on Monday also weighed on sentiment.
Spot gold edged up to $2,697.45 per ounce, while February gold futures rose 0.4% to $2,728.00 per ounce by 00:01 ET (05:01 GMT).
Gold Gains on CPI Data, Dollar Weakens
The rise in gold prices was primarily driven by softer-than-expected consumer price index (CPI) inflation data for December. While headline CPI matched forecasts, core CPI came in slightly below expectations. This followed weaker producer price index (PPI) data earlier in the week, heightening speculation that the Federal Reserve may feel confident in implementing additional rate cuts this year. Current projections indicate two rate cuts in 2025, complementing the reductions made in 2024.
Lower interest rates tend to favor gold by reducing the opportunity cost of holding non-yielding assets. The dollar also slipped from a two-year high following the CPI data but maintained much of its recent gains over the past month.
Gold’s Upside Limited by Reduced Safe-Haven Demand
Safe-haven demand for gold eased after the ceasefire agreement between Israel and Hamas, which had been a major driver of gold prices throughout 2024. Broader risk-on sentiment also pressured gold as the prospect of U.S. rate cuts encouraged appetite for riskier assets.
Traders are now awaiting additional U.S. economic data, including retail sales and jobless claims, expected later in the day, which could provide further market direction.
Mixed Trends in Precious and Industrial Metals
Other precious metals showed mixed performance. Platinum futures slipped 0.1% to $948.15 per ounce, while silver futures gained 0.3% to $31.622 per ounce.
In industrial metals, copper prices steadied after recent strong gains. Benchmark copper futures on the London Metal Exchange rose 0.3% to $9,192.50 per ton, while March copper futures were flat at $4.3957 per pound. Market focus has now shifted to China’s fourth-quarter GDP data, scheduled for release on Friday, for further insights into demand from the world’s largest copper importer.
