Gold prices rebound after hitting one-month low on short covering

REUTERS: Gold prices jumped more than 1 per cent on Thursday on short-covering after dipping to the lowest in a month earlier in the session, while the market awaited key US data for further cues on the Federal Reserve’s policy trajectory.

Spot gold gained 0.8 per cent to $2,607.88 per ounce as of 0251 GMT. However, US gold futures eased 1.2 per cent to $2,620.60.

“Very short-term oriented speculators are looking for opportunities to buy the dips and gold’s gain is because of short-covering after the metal touched the psychological level of $2,600 yesterday,” said Kelvin Wong, OANDA’s senior market analyst for Asia Pacific.

“If the US Personal Consumption Expenditures (PCE) data comes in line with expectations that shouldn’t be a big surprise. But in case it inches up to 3 per cent and above, we could see some pressure on gold again.”

Traders are now watching out for key US GDP, initial jobless claims data later in the day and core PCE data later this week for further insights into the Fed’s 2025 rate cut path.

The bullion declined more than 2 per cent to its lowest since Nov. 18 after the Fed lowered rates by 25 basis points as expected but indicated it will make fewer rate cuts by the end of 2025.

Fed Chair Jerome Powell said that the central bank’s policymakers want to see more progress in bringing inflation down as they consider the path of future rate cuts as inflation has exceeded year-end projections.

Markets now expect the Fed to leave its benchmark overnight rate unchanged at the Jan. 28-29 meeting.

Higher rates reduce the appeal of holding the non-yielding asset.

Spot silver was up 0.3 per cent to $29.44 per ounce, platinum added 0.6 per cent to $924.65 and palladium gained 1 per cent to $912.70.

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