Gold hovers near two-week high ahead of US spending data

Gold prices rose in European trade on Thursday, maintaining gains for the third straight session and hovering near two-week highs after US GDP growth data.

The data was slightly below estimates, and somewhat boosted the chances of early Fed rate cuts in the first half of the year, with investors now awaiting important US consumer spending data later today.

Spending data is the Federal Reserve’s favorite inflation gauge, thus it’ll prove crucial to forecasts about future interest rates.

Gold Prices Today

Gold prices rose 0.2% to $2,037 an ounce, with a session-low at $2,034, after closing up 0.25% yesterday, approaching a two-week high at $2,041.

The Dollar

The dollar index fell 0.15% on Thursday against a basket of major rivals, underpinning gold and other dollar-denominated metals.

The decline came after government data showed US GDP growth at 3.2% in the fourth quarter of last year, below estimates of 3.3%.

US Rates

Following the data, the odds of a 0.25% Fed interest rate cut in March barely rose to 2.5%, and the odds for a May cut stood at 23%, and the odds for a June cut stood at 62%.

Investors now expect 75 basis points of total US rate cuts this year, down from 150 basis points in previous forecasts.

US Consumer Spending

Now investors await important US personal spending data in January, crucial for gauging the likely path ahead for policies.

The SPDR

Gold holdings at the SPDR Gold Trust fell 1.44 tonnes yesterday to a total of 825.5 tonnes, the lowest since July 2019.

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