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Gold eases as dollar rebounds ahead of U.S. inflation data


Spot gold eased 0.2 per cent to $2,041.19 per ounce and U.S. gold futures for December delivery dropped 0.3 per cent to $2,041.70

Gold prices eased on Thursday as the dollar staged a rebound ahead of U.S. inflation data, although bullion was heading for its second monthly gain on hopes that the Federal Reserve would cut interest rates soon.

Spot gold eased 0.2 per cent to $2,041.19 per ounce by 0927 GMT. Bullion is 2.8 per cent higher so far this month after increasing 7.3 per cent in October.

U.S. gold futures for December delivery dropped 0.3 per cent to $2,041.70.

The dollar index advanced against its peers, making gold more expensive for other-currency holders. However, the greenback was still on track for its worst month in a year.

The downside risk for gold now is the idea that the declines being seen in the pace of inflation begin to slow and those rate cut bets get pared back as inflation becomes stickier, Michael Hewson, chief market analyst at CMC Markets, said.

Market focus is now on the U.S. PCE (personal consumption expenditure) figure, the Federal Reserve’s preferred inflation gauge, at 1330 GMT.

Today’s PCE data is unlikely to alter perceptions about another hold from the Fed in December with focus likely to shift to next week’s payrolls report, Hewson added.

Fed officials this week flagged possibilities of a rate cut in the coming months and expected growth to decline and inflation to drop further, dragging 10-year Treasury note yields to a two-and-a-half month low.

Traders have now advanced speculations for a rate cut by the Fed from an 80 per cent probability in May to a one-in-two chance in March, according to CME’s FedWatch tool.

Silver dropped 0.1 per cent to $24.98 per ounce, but was heading for its second consecutive monthly gain. Platinum was 0.6 per cent lower at $926.76.

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