Gold Takes Advantage of Dollar's Decline… But Will It Retest Support Levels? By Investing.com

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Investing.com – Gold was slightly higher in these moments of trading as the U.S. dollar and Treasury yields edged lower on Wednesday, ahead of a key U.S. inflation report that could shed some light on the path of Federal Reserve interest rate cuts.

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Gold and inflation data

“Unlike what we saw at the end of 2023, the combination of stability in the US dollar and bonds has effectively restrained gold prices,” said Tim Waters, senior market analyst at KCM Trading.

Traders are now focusing on the upcoming US consumer price inflation report on Thursday, which is expected to increase 0.2% in December and 3.2% year-on-year.

“Signs of weakness in the data could provide positive support for gold prices,” Waters said.

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Federal Reserve Governor Michael Bowman said the US central bank's monetary policy was “adequately accommodative”.

“We're seeing a little bit of a bargain after the decline, and I think there's a buying mood in the gold market overall among traders, particularly bullish traders,” Jim Wyckoff, senior analyst at Kitco Metals, told Reuters.

According to the {{frl||US Interest Rate Tracker}} on the Invest Saudi Arabia website, market participants expect a 66% chance that US interest rates will be cut in March.

Low interest rates reduce the opportunity cost of holding non-yielding bonds.

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Spot gold could retest support at $2,016 an ounce, and a break below could open the way toward $2,006, according to Reuters technical analyst Wang Tao.

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Gold in settlement yesterday

Prices erased the session's gains at the close of trade on Tuesday yesterday as markets awaited the release of US consumer price inflation data on Thursday.

After the settlement, gold futures for February delivery were at $2,033 an ounce, after touching $2,048.60 during trading.

Now gold and the dollar

Gold futures are now up $2,037 an ounce, or 0.2%.

It rose about 0.07% to $2031 an ounce.

On the other hand, it declined by 0.06% to 102.22 points.

Other metals

Spot transactions were down 0.4 percent at $22.87 an ounce, platinum was down 0.2 percent at $927.88 and up 0.1 percent at $978.97.

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