Gold prices traded slightly higher during Asian trade on Friday, with market participants monitoring persistent inflation pressures ahead of next week’s key Federal Reserve interest rate decision.
By 3:40 pm AEDT (4:40 am GMT) spot gold added $5.92 or 0.2% to US$2,686.43.
Investor focus has shifted toward the Federal Reserve policy meeting on 17th December, with markets pricing in a 96.4% chance of a 25 basis point rate cut, according to the CME FedWatch Tool.
However, policymakers are expected to deliver a hawkish message on future cuts amid stronger-than-expected producer price index (PPI) data released on Thursday.
PPI data came in at 0.4% month-over-month, ahead of 0.2% expected and accelerating to 3% on an annualised basis.
Additionally, consumer price index data revealed a slight uptick of 0.3% month-over-month, in line with expectations but higher than the previous reading of 0.2%.
Meanwhile, the U.S. dollar saw continued strength, lifting to 2-week highs following a fresh round of interest rates cut across Europe, with the European Central Bank (ECB) cutting by 25 basis points overnight.
Market participants will also be looking ahead to U.S. import and export price indexes, as well as European and U.K. industrial production indicators set for release later in Friday’s session.