Gold holds steady in muted activity, headed for best year in three

Bengaluru — Gold prices steadied on Wednesday as trading was muted in the last week of the year, but bullion was headed for its best year in three on expectations the Federal Reserve will cut rates in the first quarter of 2024.

Spot gold was down 0.1% to $2,064.79 per ounce, as of 0452 GMT, not far from a more than two-week high of $2070.39 hit on Friday. Bullion was on track to mark a more than 10% gain in 2023 — its best since 2020.

US gold futures rose 0.3% to $2,076.00 per ounce.

Gold is mainly supported by expectations of interest rate cut in the US in 2024, Jigar Trivedi, a senior analyst at Reliance Securities, said.

However, trading volumes are very thin and spot gold will remain in a $2050-$2070 range on Wednesday and Thursday, Trivedi said.

Last week’s cooler US inflation data boosted financial market expectations for an interest-rate cut from the Fed in March, with traders now pricing in about an 80% chance, according to the CME FedWatch tool.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion.

The dollar index was holding near a five-month low, while it eyed its worst yearly performance since 2020.

A weaker dollar makes gold more attractive for other currency holders.

According to Reuters market analyst Wang Tao, spot gold may break resistance at $2,073 per ounce and rise into the $2,080-$2,091 range.

Spot silver fell 0.1% to $24.16 per ounce, and looked set to mark a marginal gain of 1% over the year.

Platinum fell 0.2% to $976.75. Palladium rose 0.3% to $1,177.22. Both autocatalytic metals were on track to log a yearly decline with palladium eyeing a 34% fall — its worst since 2008.

Reuters