By Anjana Anil
(Reuters) – Gold prices rose on Thursday, helped by expectations that the Federal Reserve’s policy tightening cycle has come to an end, although a higher U.S. dollar kept gains in check.
Spot gold gained 0.4% to $1,966.41 per ounce, as of 0754 GMT.
U.S. gold futures rose 0.3% to $1,969.10.
“Gold’s strong rebound from its 200-day average gives bulls the upper hand (in) the near-term, so we prefer to buy dips above 1,940 for a potential move to the 1,985–2,000 range,” City Index senior analyst Matt Simpson said.
“Gold’s volatility has receded following the excitement after the U.S.
inflation report, and it looks quite comfortable around $1,960 despite the dollar’s attempt to recoup some of its losses,” Simpson added.
The dollar extended gains after robust U.S. economic data, making gold more expensive for overseas buyers.
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U.S. producer prices fell the most in three-and-a-half years in October amid a sharp drop in the cost of gasoline, the latest indication of subsiding inflation pressures, while retail sales fell for the first time in seven months.
On Tuesday, data showed U.S.
headline consumer prices were flat in October, against expectations for a 0.1% rise. Core CPI, at 0.2%, also came in below a forecast of 0.3%.
Signs of slowing inflation boosted bets among investors that the Fed is done with rate hikes.
Traders widely expect the central bank to leave rates unchanged in December and bet it will start cuts by May, according to the CME FedWatch tool.
Lower interest rates boost gold’s appeal, as non-yielding bullion is used as a hedge against inflation.
“Increasing conviction around the narrative of “higher-for-longer” rates is tarnishing the investment appeal of gold in the near term,” ANZ analysts said in a note.
“Nevertheless, we see strategic buying emerging after the recent price correction as long-term drivers remain in place.”
Spot silver climbed 0.5% to $23.55 per ounce, while platinum was up 0.2% to $897.37.
Palladium gained 0.9% to $1,040.69 per ounce.
(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu, Janane Venkatraman and Varun H K)
