Gold hovers around $1,930, set for muted week ahead of PCE inflation

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By Ambar Warrick

Investing.com -- Gold prices moved little on Friday as metal markets hunkered down before the release of the Federal Reserve’s preferred inflation gauge, while a recovery in the dollar also pressured prices following better-than-expected U.S. economic growth figures.

Bullion prices retreated sharply from a nine-month high on Thursday after data showed the U.S. economy grew more than expected in the fourth quarter, even as underlying trends signaled more weakness. But the reading still triggered a recovery in risk appetite, and helped the dollar recover from a near eight-month low against a basket of currencies.

Focus is now on the core Personal Consumption Expenditures price index reading for December, which is expected to have retreated further from the prior month. But the reading is still expected to be well above the Fed’s annual target of 2%.

Spot gold steadied at $1,929.82 an ounce, while gold futures inched lower to $1,929.80 an ounce by 21:02 ET (02:02 GMT). The two instruments sank 0.8% on Thursday, and were set to gain about 0.2% this week.

A mix of safe haven demand and expectations of less severe U.S. interest rate hikes boosted gold over the past six weeks, with the yellow metal now recouping most of its losses through 2022. Bullion prices were also trading about $140 below a 2022 record high.

Gold prices are now expected to trade off two major factors - signs of a global recession and any new signals on monetary policy from the Fed. The central bank is widely expected to hike interest rates by 25 basis points when it meets next week.

Other precious metals also rose on Friday after logging steep declines in the prior session. Platinum futures were up 0.2%, while silver futures rose 0.3%.

Among industrial metals, copper prices moved little on Friday, but were set for a sixth straight week of gains as the U.S. GDP data helped deter fears of an immediate recession.

High-grade copper futures fell 0.3% to $4.2713 a pound, but were set to add 0.7% this week.

The red metal has been on a tear amid increasing optimism over an economic recovery in China, the world’s largest copper importer. The country’s economy is also expected to be boosted by a week-long holiday after it relaxed most anti-COVID restrictions.