Gold prices gained traction in Asian trading on Wednesday, lifting from weekly lows near US$2,605. Investors remain cautious, with technical signals and critical U.S. economic data shaping the outlook for gold's path forward.
By 3:45 pm AEDT (4:45 am GMT) spot gold lifted $7.2 or 0.3% to US$2,640.2 per ounce.
The spotlight is on the U.S. personal consumption expenditure (PCE) price index - the Federal Reserve’s preferred inflation gauge - expected to rise 2.8% year-over-year (YoY) in October, up from September’s 2.7%.
Headline PCE inflation is also forecast to climb to 2.3% YoY from 2.1%.
Gold’s recovery was buoyed by continued weakness in the U.S. dollar and declining U.S. Treasury yields. Market sentiment around the dollar soured after President-elect Donald Trump selected Scott Bessent as Treasury Secretary. Known as a fiscal conservative, Bessent’s appointment reassured bond markets, applying downward pressure on yields and the dollar.
Geopolitical developments further dampened safe-haven demand for the greenback. A ceasefire between Israel and Lebanon’s Hezbollah group, brokered by the U.S. and France, came into effect early Wednesday, easing geopolitical tensions.
However, markets remain cautious following mixed signals in the Federal Reserve’s November meeting minutes, which revealed divisions among policymakers on the trajectory of future rate cuts.
Despite a less dovish Fed, the CME Group’s FedWatch Tool indicates a 66.5% probability of a 25-basis-point rate cut next month, keeping gold supported as traders anticipate a prolonged period of monetary easing.