Gold prices will be less volatile next year- analyst
By Ashitha Shivaprasad
Dec 23 (Reuters) – Gold prices hemmed into a tight range on Friday in thin trading, as cautious traders awaited economic data due later in the day to gauge the Federal Reserve’s rate hike stance.
Spot gold XAU= was up 0.1% to $1,795.18 per ounce as of 0552 GMT. U.S. gold futures GCv1 rose 0.4% to $1,802.70.
Investors’ attention turns to personal consumption expenditure (PCE) data due at 1330 GMT, for cues on inflation.
“Gold will get a boost if the data indicates that inflation has reined a little, which might raise expectations of the Fed slowing down on rate hikes,” said Brian Lan, managing director at Singapore-based dealer GoldSilver Central.
Bullion prices dropped more than 1% on Thursday after U.S. economic data highlighted the country’s economy rebounded faster than previously estimated, boosting the dollar and potentially setting the Fed on a keener path to fight inflation.
Meanwhile, new claims for unemployment benefits rose less than expected last week in the United States, data on Thursday showed.
“The market is in a digestion tone after yesterday’s data. We saw a strong move to a news that was not especially dramatic because of low liquidity in the market before the Christmas holiday,” said Ilya Spivak, head of global macro at Tastytlive.
Gold is considered a hedge against inflation and economic uncertainties, but higher interest rates increase the opportunity cost of holding bullion since it pays no interest.
I think gold prices will be less volatile next year and expect to resume an upward trend with recession likely in the picture, Lan added.
Market participants also kept a close tab on rising COVID-19 infections in top gold consumer China that could have an impact physical buying. GOL/AS
Spot silver rose 0.3% to $23.64 per ounce.
Platinum gained 0.8% to $985.00 and palladium rose 0.2% to $1,683.63, but both the metals were headed for their secondly straight weekly fall.
