Gold Nears One-Month Peak Amid US Inflation Slowdown
Gold prices remained close to their highest point in a month on Friday, following reports indicating a slowdown in inflation within the United States, as market participants anticipate insights from multiple Federal Reserve monetary policymakers. As of early trading, spot gold increased slightly by 0.1% to $2,046.09 an ounce, reaching near the peak of $2,050.59 observed on Thursday - the highest since February 2. Meanwhile, U.S. gold futures maintained their position at $2,054.60.
The market's response came after the personal consumption expenditures (PCE) report showed a reassuring slowdown in underlying inflation on an annual basis. January's PCE inflation data indicated a 2.4% rise, marking the smallest annual increment since February 2021 and a decrease from December's 2.6% increase.
With the U.S. central bank officials emphasizing the overall progress in curbing inflation, expectations are building for potential rate cuts later this year. Such reductions would enhance gold's appeal, a non-yielding asset, especially as traders now foresee three quarter-point rate reductions by the end of 2024.
Attention now turns to upcoming comments from at least six Fed monetary policymakers due for release on Friday. Despite a 3.3% decline in holdings by the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, in February, and a 6.4% drop since the start of the year, gold prices find backing from various quarters, including China's central bank which stands as a significant gold reserve buyer.
In the metals market, spot platinum rose by 0.8% to $882.60 an ounce, and palladium increased by 0.7% to $948.38, although both metals have seen monthly declines for two consecutive months, with palladium hitting over five-year lows. The ongoing price pressure has led Impala Platinum to consider the potential closure of some of its unprofitable South African mines if restructuring efforts don't yield improved margins. Spot silver also saw a rise, up by 0.5% to $22.79.
