Gold inched higher as traders weighed the outlook for monetary policy after the US Federal Reserve’s (US Fed) preferred measure of underlying inflation came in below expectations last week.
Bullion traded near US$2,632 ($3,568) an ounce in thin trading after closing 1.1% higher on Friday, following the print of the core US personal consumption expenditures price index for November. The reading was muted, a step in the right direction for policymakers looking to reduce interest rates further in 2025.
Lower rates are typically a positive for gold, as it doesn’t pay interest.
The precious metal has climbed more than a quarter this year and hit record levels, supported by US monetary easing, safe-haven demand, and buying by the world’s central banks. However, the rally eased after the election of Donald Trump, which boosted the dollar. A stronger greenback makes commodities priced in the currency more expensive for most buyers.
Spot gold was up 0.4% at US$2,632.17 an ounce at 7:34 am in London, after falling 1% last week. The Bloomberg Dollar Spot Index was flat, following a 0.6% weekly gain. Platinum and silver rose over 1%, while palladium advanced 0.7%.
