The US inflation data has caused gold to move in a restricted band

The US inflation data has caused gold to move in a restricted band

According to official figures released on Thursday, the US economy expanded more quickly than anticipated in the fourth quarter as inflationary pressures decreased in the face of strong consumer spending.

Having bullion has a lower opportunity cost when interest rates are low.

Due to investor apathy ahead of a crucial US inflation report that might influence the direction of the Federal Reserve policy meeting the following week, gold prices were range-bound on Friday.

As of 10:20 GMT, spot gold was down 0.3% at $2,022.29 per ounce for the week. US gold futures increased to $2,022.20, up 0.2%.

According to Kunal Shah, director of research at Nirmal Bang Commodities in Mumbai, the Red Sea issue, whereby assaults on ships by Houthi terrorists from Yemen have hindered maritime commerce via the Suez Canal, is raising expectations for inflation.

According to Shah, this has caused the market to speculate that interest rate reduction would not occur as quickly as they did before, or they could be postponed, which means gold will not be able to perform.

Because of concerns about the effects of growing Middle East tensions on energy supply, oil prices have increased by more than 6% so far this year.

The focus of market players is now shifting to personal consumption expenditure (PCE) data, which is expected at 1330 GMT and is the Fed's preferred inflation indicator.

The positive data coming from the United States is still having a little effect on prices; nevertheless, the rate for the U.S.It is also anticipated that there will be a cut." Giovanni Staunovo, an analyst at UBS, observed that "gold prices have been kept unchanged, somehow keeping a balance."

"The Fed is mostly driven by PCE. The price of gold and prospects for a rate drop will both benefit from a lower-than-expected print rate, the speaker said.

The CME FedWatch tool indicates that there is a 90% likelihood of a rate drop by May, despite the market's general expectation that the Fed would keep interest rates steady at its policy meeting on January 30-31.

Having bullion has a lower opportunity cost when interest rates are low.

According to official figures released on Thursday, the US economy expanded more quickly than anticipated in the fourth quarter as inflationary pressures decreased in the face of strong consumer spending.

Spot silver increased by 0.1% to $22.94 per ounce, palladium decreased by 0.7% to $933.27, and platinum increased by 0.8% to $898.08.