Gold prices edged closer to a month’s high, registering a slight increase of 0.1% to $2,046.09 an ounce early Friday, after reaching a notable peak of $2,050.59 the day before, the highest since early February. This upward movement is largely attributed to recent data suggesting U.S. inflation might be easing, alongside market anticipation regarding potential Federal Reserve rate adjustments. With U.S. gold futures holding steady at $2,054.60, the market reacted positively to the personal spending report and the core-PCE inflation’s year-on-year increase of just 2.4% in January, marking the lowest annual inflation rate since February 2021. This cooling inflation trend fuels speculation that the Fed might cut interest rates later in the year, making gold, which doesn’t offer interest, an increasingly attractive investment option.
Despite the optimism, the gold market faces pressure from ETF outflows, notably a 3.3% decrease in holdings by the SPDR Gold Trust in February. However, gold’s appeal remains resilient, supported by significant buying from central banks, with China’s central bank being a prominent buyer. On a related note, the precious metals market, including platinum and palladium, also witnessed some price increases, although both have been on a downward trend for two months. Impala Platinum, a key player in the platinum group metals industry, has voiced concerns over continuing low prices and the potential need to shut down underperforming South African mines. These developments highlight the complex interplay between macroeconomic indicators, central bank policy, and investor sentiment shaping the gold and precious metals markets.
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