Investing.com — Gold prices hit a one-month high in Asian trade on Thursday as slightly softer consumer inflation data boosted hopes for lower interest rates this year, tracking declines in the dollar and U.S. Treasury yields. rose to
The yellow metal has now topped $2,700 an ounce for the first time since early December, as some believe slowing inflation and a cooling labor market could allow the Federal Reserve to cut rates further this year. It's getting close to being done.
However, further gains in gold were limited by reduced safe-haven demand after Israel and Hamas signed a US-brokered ceasefire. Expectations for further US economic data limited the dollar's decline, as did uncertainty ahead of President-elect Donald Trump's nomination on Monday.
By 12:01 ET (5:01 p.m. Japan time), February expiry was up 0.4%, slightly higher at $2,728.0 an ounce.
Gold benefits from CPI easing, dollar falls
Gold's rise was mainly due to consumer price index inflation data for December coming in slightly lower than expected. The headline matched expectations, but slightly missed expectations.
But the report, which came a day after weaker-than-expected economic data, reinforced expectations that easing U.S. inflation will give the Fed more confidence in cutting interest rates this year. The central bank is expected to cut interest rates twice in 2025, half of the total cut in 2024.
Low interest rates benefit gold by reducing the opportunity cost of investing in non-yielding assets.
CPI data shows that although the index is down from a two-year high, it still holds most of its gains over the past month.
Gold's gains are expected to be limited as demand for safe-haven assets recedes. Data is coming
However, gold's gains were limited as demand for safe-haven assets eased, especially after the Israeli-Hamas ceasefire. The Middle East conflict was the main driver of gold demand in 2024.
The yellow metal was also weighed down by gains in broader risk-oriented assets as risk appetite increased on the prospect of US interest rate cuts.
Traders remained nervous ahead of further important economic data due in the coming days. U.S. retail sales and unemployment claims data are expected to be released later in the day.
Other precious metals were mixed, with inflation rising modestly this week. It fell 0.1% to $948.15 an ounce, while it rose 0.3% to $31.622 an ounce.
Among industrial metals, copper prices have stabilized after a recent series of strong increases. The benchmark price on the London Metal Exchange rose 0.3% to $9,192.50 a tonne, but was flat in March at $4.3957 a pound.
Focus is now squarely on China's fourth quarter statistics due out on Friday for further clues about the world's largest copper importer.
